Definition of FICA
FICA is the acronym for Federal Insurance Contributions Act. FICA consists of the U.S. Social Security payroll tax and the Medicare payroll tax.
The FICA payroll tax is withheld from employees and also matched by the employer. In effect, the employer is responsible for remitting two times the amount withheld from its employees.
For the calendar year 2024, the FICA withholding consists of:
- The Social Security tax of 6.2% withheld from the first $168,600 of each employee’s earnings (wages, salaries, etc.) in the year 2024 (January 1 through December 31, 2024).
- The Medicare tax of 1.45% withheld from the total amount of an employee’s 2024 earnings. (There is no annual earnings cap or limit for the Medicare tax.)
For the calendar year 2025, the FICA withholding consists of:
- The Social Security tax of 6.2% withheld from the first $176,100 of each employee’s earnings in the year 2025 (January 1 through December 31, 2025).
- The Medicare tax of 1.45% withheld from the total amount of an employee’s 2025 earnings. (There is no annual earnings cap or limit for the Medicare tax.)
Employer Must Match the Employees’ FICA Withholdings
In addition to the FICA amounts withheld from employees’, the employer must match the FICA taxes withheld from employees. In other words, the employer will have an additional expense equal to the total of the FICA taxes withheld from its employees (except that the employer does not match the Additional Medicare Tax). The employer must remit the FICA withholdings plus its matching amount to the federal government by specified dates.
A self-employed person pays both the employee and employer portions of the FICA tax.
Additional Information on FICA
The annual earnings wage limits, FICA rates, and information on the Additional Medicare Tax for higher income ($200,000+) taxpayers can be found on IRS.gov.
