FICA stands for Federal Insurance Contributions Act. It funds Social Security and Medicare — the two largest federal social insurance programs. Nearly every US worker pays FICA tax, whether employed or self-employed.
For employees in 2026, FICA tax is 7.65% of gross wages: 6.2% for Social Security and 1.45% for Medicare. Employers match this amount, paying an additional 7.65%. Self-employed individuals pay both halves: 15.3% total.
Social Security tax applies only to earnings up to the wage base limit. For 2026, this limit is $168,600. Earnings above this cap are not subject to Social Security tax.
Medicare tax has no wage base cap — all earned income is subject to Medicare tax. High earners face an additional 0.9% Medicare surtax on wages exceeding $200,000 (single) or $250,000 (married).
Payroll taxes are flat and regressive (with the wage base cap). Income taxes are progressive with increasing marginal rates. Payroll taxes are dedicated to specific programs; income taxes fund general government operations.
For most middle-income workers, payroll taxes plus federal income tax consume 20–35% of gross wages, depending on state and filing status.
Self-employed workers pay both employer and employee portions of FICA, called self-employment tax. However, they can deduct the employer-equivalent portion (7.65%) from taxable income as an above-the-line deduction.
This deduction partially offsets the double FICA burden but does not eliminate it. The net self-employment tax rate after deduction is approximately 14.1%.
During emergencies, Congress has authorized temporary payroll tax deferrals (not forgiveness). Deferred amounts must eventually be repaid. The Employee Retention Credit (ERC) provided refundable payroll tax credits during COVID-19 but is no longer available for 2026.
Always verify current-year rules before planning; payroll tax policies change with legislation.
Your total paycheck deductions include federal income tax, state income tax, FICA, and possibly local taxes. Combining these, your take-home pay may be 60–75% of gross wages depending on your state and income level.
Use our Tax Calculator to see the full picture: enter your income, filing status, and state to estimate your total tax burden including federal income tax.