What Is FICA Tax and How Much Do You Pay?

Look at your pay stub. Below federal and state tax, there are two lines most people never think about: "OASDI" and "Medicare." Together, they take 7.65% of your gross pay, and unlike income tax, there's no standard deduction. Dollar one is taxed. For workers earning under $50,000, FICA is often the single biggest tax deduction on the paycheck.

Here's what FICA actually is, where the money goes, and why you can't reduce it.

FICA Stands for Federal Insurance Contributions Act

FICA is the law that requires you to fund two programs with every paycheck: Social Security and Medicare. Together, they're 7.65% of your gross pay. Your employer pays a matching 7.65% on top of what you pay, but you never see that.

• Social Security (OASDI): 6.2% of your gross pay, up to $168,600 in 2025 (2026 cap expected to rise slightly)
• Medicare: 1.45% of your gross pay, no cap
• Additional Medicare: 0.9% on income above $200,000 (single). This only kicks in at high incomes

What Desiree Pays on $48,000

Desiree earns $48,000. Here's her FICA breakdown:

• Social Security: $48,000 × 6.2% = $2,976
• Medicare: $48,000 × 1.45% = $696

Total FICA: $3,672 per year, or $141 per biweekly paycheck.

That $141 comes out before she ever sees the money. Her employer sends another $3,672 to the government on her behalf. In total, $7,344 per year goes to Social Security and Medicare from her job.

What Does FICA Actually Pay For?

Social Security funds retirement benefits, disability insurance, and survivor benefits. When you retire, the amount you receive is based on your 35 highest-earning years. The average retired worker receives about $1,900/month in 2025.

Medicare funds health insurance for people 65 and older (and some younger people with disabilities). Part A covers hospital stays. Part B covers doctor visits and outpatient care. You've been paying into it since your first job.

Desiree is 26. She won't collect Social Security for nearly 40 years. Whether the program will look the same by then is a separate conversation, but the tax isn't optional.

FICA vs. Income Tax: What's the Difference?

Income tax and FICA are completely separate:

• Income tax is progressive (different rates for different brackets) and reduced by the standard deduction.
• FICA is flat (7.65%) and applies to your full gross pay with no deduction. Dollar one is taxed.

For many workers earning under $50,000, FICA is actually a bigger deduction than federal income tax. Desiree pays $3,672 in FICA but only about $2,680 in federal income tax. FICA is the bigger bite.

Can You Reduce FICA?

For W-2 employees: no. There's no deduction, no credit, no way to lower it. It's calculated on your gross pay and taken automatically.

For self-employed workers: it's more complicated. You pay both halves (15.3%), but you can deduct half from your income tax, and business deductions reduce the net income FICA applies to.

Frequently Asked Questions

Does FICA apply to bonuses?

Yes. FICA applies to all earned income including bonuses, overtime, and commissions. Your employer may withhold at a higher rate on bonuses, but the annual amount is the same.

Is there a cap on FICA tax?

Social Security has a wage cap ($168,600 in 2025). Income above that isn't taxed for Social Security. Medicare has no cap, and adds an extra 0.9% above $200,000.

Do I get FICA money back?

Not directly. FICA funds Social Security and Medicare, which you access in retirement (or if you become disabled). There's no refund, but you're building future benefits.