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What is FICA?

FICA is the acronym for Federal Insurance Contributions Act.

FICA is commonly used in the U.S. when referring to the combination of the Social Security tax and the Medicare tax:

  • The Social Security tax of 6.2% is withheld from the first $128,400 of each employee's earnings in the calendar year 2018 (January 1 through December 31, 2018)
  • The Medicare tax of 1.45% is withheld from the total amount of an employee's earnings. (There is no earnings cap or limit on the Medicare tax.)

In addition, the employer must match the FICA taxes withheld from its employees. This means that the employer will have an additional expense equal to the total of the amount withheld from its employees and the responsibility to remit both to the federal government.

A self-employed person must pay both the employee portion and the employer portion of the FICA tax.

The earnings wage limits and rates for other years as well as information on the Medicare surtax for higher income taxpayers can be found on IRS.gov.