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FICA Tax: Definition and How It Works in 2026

FICA is a payroll tax that goes toward funding Social Security and Medicare. Employees and employers split the total cost.

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Tina Orem

Editor & Content Strategist

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23 years of experience

Expertise

• Taxes
• Small business
• Social Security and estate planning
• Home services
• RIA

Tina Orem is an editor and content strategist at NerdWallet. Prior to becoming an editor and content strategist, she covered small business and taxes at NerdWallet. She has a degree in finance, as well as a master's degree in journalism and an MBA. Previously, she was a financial analyst and director of finance at public and private companies. Tina's work has appeared in a variety of local and national media outlets.

Published in

Editor & Content Strategist

Tina Orem is an editor and content strategist at NerdWallet. Prior to becoming an editor and content strategist, she covered small business and taxes at NerdWallet. She has a degree in finance, as well as a master's degree in journalism and an MBA. Previously, she was a financial analyst and director of finance at public and private companies. Tina's work has appeared in a variety of local and national media outlets.

Lei Han

Professor of accounting

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Lei Han, Ph.D., is an associate professor of accounting at Niagara University in Western New York and a New York state-licensed CPA. She obtained her Ph.D. in accounting with a minor in finance from the University of Texas at Arlington. Her teaching expertise is advanced accounting and governmental and nonprofit accounting. She is a member of the American Accounting Association and New York State Society of Certified Public Accountants.

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At NerdWallet, our content goes through a rigorous editorial review process. We have such confidence in our accurate and useful content that we let outside experts inspect our work.

Professor of accounting

Sheri Gordon

Assigning Editor

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Expertise

• Credit scoring
• budgeting
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Sheri Gordon is a former assigning editor on the Core Personal Finance team at NerdWallet and has edited financial content for more than 20 years. Before joining NerdWallet, Sheri was on the business and metro copy desks at the Los Angeles Times, where she worked on stories that won the 1998 Pulitzer Prize for breaking news. Sheri has edited publications on arts, culture, food, education and activism. She has also edited books on water policy, healthy living and architecture. Sheri earned a Bachelor of Arts in history at the University of California, Los Angeles.

Assigning Editor

Sheri Gordon is a former assigning editor on the Core Personal Finance team at NerdWallet and has edited financial content for more than 20 years. Before joining NerdWallet, Sheri was on the business and metro copy desks at the Los Angeles Times, where she worked on stories that won the 1998 Pulitzer Prize for breaking news. Sheri has edited publications on arts, culture, food, education and activism. She has also edited books on water policy, healthy living and architecture. Sheri earned a Bachelor of Arts in history at the University of California, Los Angeles.

Sabrina Parys

Editor & Content Strategist

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Expertise

• Taxes
• Investing

Sabrina Parys is an editor and content strategist on the taxes and investing team at NerdWallet, where she manages and writes content on personal income taxes. Her previous experience includes five years as a copy editor and associate editor in academic and educational publishing. She is based in Brooklyn, New York.

Published in

Editor & Content Strategist

Sabrina Parys is an editor and content strategist on the taxes and investing team at NerdWallet, where she manages and writes content on personal income taxes. Her previous experience includes five years as a copy editor and associate editor in academic and educational publishing. She is based in Brooklyn, New York.

Whether you work for an employer or are self-employed, you're required to give the government a share of your earnings. In the U.S., employers withhold taxes from each paycheck for Social Security and Medicare, which are collectively referred to as FICA taxes.

What is FICA tax?

FICA is a payroll tax, and it's short for the Federal Insurance Contributions Act. The law requires employers to withhold a certain percentage of an employee’s wages to help fund Social Security and Medicare. The total bill is split between the employer and the employee. 

How FICA tax works

FICA taxes are a combination of Social Security and Medicare taxes that equal 15.3% of your earnings. If you work for an employer, you are responsible for half of the total bill (7.65%), which includes a 6.2% Social Security tax and 1.45% Medicare tax on your earnings

On your paycheck, the Social Security portion of FICA is sometimes labeled as “OASDI tax,” which is short for “old-age, survivors, and disability insurance” tax. Your Social Security number is used to record how much you've paid.

If you're self-employed, you are responsible for paying the full 15.3% FICA tax. Because you may not be receiving a traditional paycheck, you may need to file estimated quarterly taxes in lieu of withholdings. The good news? You can usually deduct half of what you pay in self-employment taxes when you file your tax return.

» MORE: How the self-employment tax works

FICA tax rates for 2026

In 2026, only the first $184,500 of your earnings are subject to the Social Security tax, up from $176,100 in 2025.

There is an additional 0.9% surtax on top of the standard 1.45% Medicare tax for those who earn over $200,000 (single filers), $250,000 (joint filers) or $125,000 (married filing separately)

Employee pays

Employer pays

Social Security tax (aka OASDI)

6.2%

Only on the first $184,500 in 2026.

6.2%

Only on the first $184,500 in 2026.

Medicare tax

1.45%.

1.45%.

Total

7.65%.

7.65%.

Additional Medicare tax

0.9%

Only on earnings over $200,000 for single filers; $250,000 for joint filers; and $125,000 for those married filing separately.

What is withholding tax?

A withholding tax is an income tax that a payer (typically an employer) remits on a payee's behalf (typically an employee). The payer withholds the tax from the payee's income. FICA tax is a type of withholding tax.

Other payroll tax items you may hear about

FUTA tax: This stands for Federal Unemployment Tax Act. The tax funds a federal program that provides unemployment benefits to people who lose their jobs. Employees do not pay this tax or have it withheld from their pay. Employers pay it.

SUTA tax: The same general idea as FUTA, but the money funds a state program. Employers pay the tax.

Why do I have to pay FICA tax?

Employers have to withhold taxes — including FICA taxes — from employee paychecks because taxes are a pay-as-you-go arrangement in the United States. When you earn money, the IRS wants its cut as soon as possible.

Some people are “exempt workers,” which means they elect not to have federal income tax withheld from their paychecks. Social Security and Medicare taxes will still come out of their checks, though.

Typically, you become exempt from withholding only if two things are true:

You got a refund of all your federal income tax withheld last year because you had no tax liability.

You expect the same thing to happen this year.

» MORE: How to fill out a W-4 form

Helpful resources