FICA refers to payroll taxes supporting Social Security and Medicare. For most covered employees, the employer withholds an employee share and pays an employer share. FICA is separate from federal income-tax withholding and follows different taxable-wage rules.
The two parts of FICA
Social Security tax applies at its employee rate only until annual Social Security wages reach the wage base. Medicare tax generally applies without that cap. Additional Medicare withholding can apply to employee wages above an employer threshold.
FICA wages versus federal taxable wages
A traditional 401(k) often reduces federal income-tax wages but not Social Security or Medicare wages. Qualifying cafeteria-plan benefits may receive different treatment. Pay stubs therefore can display multiple taxable-wage totals.
The employer share
Employers generally pay corresponding Social Security and Medicare amounts. The employer share is a business payroll cost; it is not an additional line subtracted from employee net pay.
Self-employment tax
Self-employed people generally account for both the employee- and employer-equivalent portions through self-employment tax, with separate deduction and estimated-payment rules. A W-2 paycheck calculator should not be used as a complete 1099 tax estimate.
Year-to-date limits
Payroll tracks Social Security wages across checks for the same employer. After the wage base is reached, employee Social Security withholding normally stops for that employer for the year. Medicare and income-tax withholding can continue.
Reading the pay stub
Look for OASDI, Social Security, Medicare, HI, or FICA labels. Compare current and year-to-date taxable wages with the taxes. Do not apply 7.65% blindly when the wage base, Additional Medicare, or excluded benefits matter.
Worked paycheck example
A traditional 401(k) contribution may lower federal income-tax withholding while the full eligible wage remains subject to Social Security and Medicare. The paycheck can therefore show lower federal taxable wages than FICA wages without containing an error.
Common mistakes to avoid
- Combining FICA with federal income tax
- Applying Social Security beyond the wage base
- Assuming a 401(k) eliminates FICA
- Subtracting the employer match from employee pay
- Ignoring Additional Medicare withholding
Frequently asked questions
Is FICA refundable?
It is generally payroll tax, though tax-return rules can address excess employee Social Security withholding from multiple employers.
Do all workers pay FICA?
Most covered employees do, but limited statutory exceptions exist.
Sources, review, and next step
This educational guide prioritizes primary government references and is reviewed for consistency with our calculators. It is not individualized tax, payroll, accounting, or legal advice.
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