Federal Insurance Contributions Act (FICA)

A reference used to indicate the combination of the Social Security tax and the Medicare tax. For the year 2011, the employee's portion of the FICA tax is 5.65% (the Social Security tax of 4.2% plus the Medicare tax of 1.45%) on the first $106,800 of an employee's salary and wages. On an employee's salary and/or wages in excess of $106,800 the employee's portion of the FICA tax is 1.45% (consisting of only the Medicare tax).

In the year 2011, the employer's portion of the FICA tax is 7.65% (the Social Security tax of 6.2% plus the Medicare tax of 1.45%) on each employee's first $106,800 of salary and wages. On each employee's salaries and wages in excess of $106,800 the employer's portion is the Medicare tax of 1.45%. Therefore, the combined employee and employer FICA tax for 2011 is 13.3% (5.65% + 7.65%) on each employee's first $106,800 of salary and wages and then 2.9% (1.45% + 1.45%) on each employee's salary and wages in excess of $106,800. To learn more, see Explanation of Payroll Accounting.