Federal Insurance Contributions Act (FICA)

A reference used to indicate the combination of the Social Security tax and the Medicare tax. For the years 2009 and 2010, the employee's FICA tax rate is 7.65% on the first $106,800 of an employee's salary or wages and then 1.45% (the Medicare tax) on any salary or wages in excess of $106,800. The employer must match the employee's FICA tax, so that the combined employee and employer tax is 15.30% on each employee's first $106,800 of annual wages and then 2.90% on any salary or wages in excess of $106,800. To learn more, see Explanation of Payroll Accounting.