FICA Taxes
What Are FICA Taxes and How Are They Calculated?
FICA (Federal Insurance Contributions Act) taxes fund Social Security and Medicare. Employees and employers each contribute 6.2% of wages (up to an annual wage base) for Social Security and 1.45% for Medicare, with employers matching every dollar withheld.
FICA is split into two components with different rules. Social Security tax applies only up to an annual wage base—$184,500 for 2026—meaning earnings above that threshold aren’t subject to the 6.2% Social Security tax for the remainder of the year. Medicare tax has no wage cap; it applies to all wages at 1.45%, with an additional 0.9% Additional Medicare Tax on employee wages above $200,000 (employers don’t match this additional portion).
Employers are responsible for withholding the employee’s share from each paycheck and matching it dollar-for-dollar as an employer payroll tax expense. These amounts are deposited with the IRS on a set schedule and reported quarterly on Form 941 and annually on Form W-2.
Because the Social Security wage base and Additional Medicare Tax threshold change annually, employers running payroll on outdated tax tables risk under- or over-withholding.
Key FICA Tax Rates and Wage Base Limits for 2026
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Social Security: 6.2% each for employer and employee, up to the $184,500 wage base (2026).
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Medicare: 1.45% each, no wage cap; additional 0.9% employee-only surtax above $200,000.
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Employers match the standard employee FICA contribution dollar-for-dollar.
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Reported quarterly (Form 941) and annually (W-2).
Frequently Asked Questions
Do employers pay the same FICA rate as employees?
Yes for the standard rates—employers match employee contributions, though not the additional 0.9% Medicare surtax.
What happens once an employee hits the Social Security wage base?
Social Security withholding stops for the rest of the calendar year; Medicare withholding continues on all wages with no cap.
Does the Social Security wage base change every year?
Yes—it rose to $184,500 for 2026, up from $176,100 in 2025.
Is there a wage cap for Medicare tax?
No, Medicare tax applies to all wages with no cap, unlike Social Security tax, which stops once the annual wage base is reached.
What happens if an employer under-withholds FICA taxes?
The employer is generally liable for the shortfall plus penalties and interest, even if the error was unintentional.
Related terms: Employer Payroll Taxes, Payroll Tax Withholding, SUTA/FUTA