FICA stands for the Federal Insurance Contributions Act, and it funds two programs: Social Security and Medicare. Combined, they take 7.65% from every paycheck you earn — 6.2% for Social Security and 1.45% for Medicare. On a $75,000 salary, that’s $5,737.50 per year, or $220.67 per biweekly paycheck. For most workers, FICA costs more than state income tax.
Social Security tax (6.2%) has a wage base cap that adjusts annually for inflation. In 2026, the cap is $176,100 — meaning you stop paying Social Security tax after earning that amount. Maximum Social Security tax per worker: $10,918.20. If you earn $250,000, you pay the same $10,918.20 as someone earning $176,100. Above the cap, your effective SS rate drops. Medicare (1.45%) has no cap whatsoever — every dollar you earn is taxed.
High earners face an Additional Medicare Tax of 0.9% on wages above $200,000 (single) or $250,000 (married filing jointly). This surtax, introduced by the Affordable Care Act, is paid only by the employee — employers don’t match it. A single filer earning $300,000 pays: 1.45% on all $300,000 ($4,350) plus 0.9% on $100,000 above the threshold ($900) = $5,250 total Medicare tax.
Your employer matches your FICA contributions dollar-for-dollar — they pay an additional 6.2% for Social Security and 1.45% for Medicare on your behalf. You never see this money, but it’s a real cost of employing you. On a $75,000 salary, your employer pays $5,737.50 in FICA taxes, bringing the total FICA contribution to $11,475. This is why your ‘total compensation cost’ to the company exceeds your salary by 7.65% or more.
Self-employed individuals pay both halves — the full 15.3% — through self-employment tax. On $100,000 of net self-employment income, that’s $14,130 (after the 92.35% calculation adjustment the IRS applies). The IRS does allow self-employed workers to deduct the employer-equivalent half (7.65%) from their gross income, which reduces income tax but doesn’t reduce the self-employment tax itself.
What you get back: Social Security benefits at retirement are based on your 35 highest-earning years. The average monthly Social Security benefit in 2026 is $1,976, with the maximum at $4,873 for those who earned at or above the wage cap for 35 years. Medicare provides health insurance starting at age 65. Whether FICA is a ‘good deal’ depends on your lifespan and health costs, but it’s not optional — every W-2 employee and self-employed worker pays it on every dollar earned.