What Are Payroll Taxes? FICA, Social Security & Medicare Explained
FICA, Social Security, Medicare — here's what these payroll taxes are, how much they cost you, and what your employer pays.
What is FICA?
FICA stands for the Federal Insurance Contributions Act. It's the payroll tax that funds Social Security and Medicare. Unlike income tax, FICA is a flat rate and applies to nearly all wages regardless of your tax bracket.
Social Security tax (6.2%)
Employees pay 6.2% of their wages toward Social Security, and employers match it with another 6.2%. In 2026, this tax applies only to the first $184,500 of wages — the 'wage base limit.' Earnings above that amount are not subject to Social Security tax, so the maximum an employee pays in 2026 is about $11,439.
Medicare tax (1.45%)
Employees pay 1.45% of all wages toward Medicare, with no wage base limit, and employers match it. High earners pay an Additional Medicare Tax of 0.9% on wages above $200,000 (single) or $250,000 (married filing jointly) — but employers do not match that additional amount.
What your employer pays
For every dollar of FICA you pay, your employer generally pays a matching dollar (except the additional Medicare tax). Self-employed workers pay both halves themselves through the self-employment tax, though they can deduct the employer-equivalent portion.
Payroll tax vs. income tax
It's important not to confuse the two. Income tax is progressive and depends on your total income, filing status, and deductions. Payroll tax (FICA) is a flat percentage dedicated to Social Security and Medicare. Both come out of your paycheck, but they fund very different things.