Look at any pay stub and you’ll see a line labeled FICA (or sometimes broken out as OASDI and Medicare). It’s the second-biggest deduction on most paychecks after federal income tax, and unlike income tax, you can’t lower it with standard deductions.
What FICA Stands For
FICA = Federal Insurance Contributions Act. The tax funds two federal programs:
- Social Security (technically OASDI — Old Age, Survivors, and Disability Insurance)
- Medicare (the federal health insurance program for people 65+ and certain disabilities)
The 2026 Rates
Social Security (OASDI)
- Rate: 6.2% on your gross wages
- Wage base cap: $184,500 for 2026. Wages above that aren’t taxed for Social Security.
- Employer pays an additional matching 6.2%. So the government collects 12.4% total — but only half shows up on your paystub.
Medicare
- Rate: 1.45% on all wages (no cap)
- Employer matches another 1.45%
- Additional Medicare Tax: 0.9% kicks in on wages above $200,000 (single) or $250,000 (married filing jointly). This is employee-only — the employer doesn’t match.
Total “standard” FICA
For most workers, FICA = 6.2% + 1.45% = 7.65% of gross wages.
Example: $75,000 Salary
On a $75,000 gross salary:
- Social Security: $75,000 × 6.2% = $4,650
- Medicare: $75,000 × 1.45% = $1,088
- Total FICA: $5,738 per year (about $221 per bi-weekly paycheck)
Example: $250,000 Salary (Single)
- Social Security: $184,500 × 6.2% = $11,439 (capped at wage base)
- Medicare: $250,000 × 1.45% = $3,625
- Additional Medicare: ($250,000 - $200,000) × 0.9% = $450
- Total FICA: $15,514
Notice how Social Security stops growing after $184,500 of income — at higher salaries, effective FICA rate actually falls.
Can You Reduce FICA?
Mostly no. FICA is calculated on gross wages before most pre-tax deductions. A 401(k) contribution reduces your federal income tax but not FICA. A traditional IRA contribution doesn’t reduce FICA either (because you contribute post-paycheck).
Exceptions — these pre-tax benefits DO reduce FICA:
- HSA contributions through payroll (if you have a high-deductible health plan)
- Section 125 / Cafeteria Plans: health insurance premiums, FSA (health and dependent care), commuter benefits
- Group-term life insurance up to $50,000 of coverage
Contributing to an HSA is the single most effective way to lower both your income tax AND FICA — one of the few truly “triple tax advantaged” accounts in the US tax code.
Self-Employed? Double It
If you’re self-employed, you pay the full 15.3% FICA yourself (6.2% × 2 + 1.45% × 2) through self-employment tax — but you get to deduct half of it on your federal return. It’s still a much bigger hit than W-2 workers notice.
What Happens to the Money
- Social Security taxes fund retirement, disability, and survivor benefits. Your current tax pays current retirees.
- Medicare taxes fund hospital insurance (Medicare Part A) for people 65+.
Both programs are funded on a “pay as you go” basis. There’s no individual account with your name on it.
TL;DR
- FICA is 7.65% off the top of every W-2 paycheck (employee side)
- Social Security portion (6.2%) caps at $184,500 of wages in 2026
- Medicare (1.45%) has no cap, plus 0.9% surcharge for high earners
- Standard deductions and 401(k) contributions don’t reduce FICA — only a handful of pre-tax benefits (HSA, cafeteria plans) do
Use a paycheck calculator to see exactly how FICA, federal tax, and state tax affect your take-home pay.