Glossary · Payroll
FICA
FICA is the US federal payroll tax for Social Security and Medicare, named for the Federal Insurance Contributions Act. Employees pay 6.2% Social Security on wages up to the yearly wage base ($184,500 in 2026) and 1.45% Medicare on all wages, and employers match both, for 15.3% in total.
Glossary / FICA · Also called Social Security and Medicare taxes
How it works
The employer withholds the employee share from each paycheck and adds its own matching share. Both are deposited with federal income tax withholding and reported on Form 941 each quarter. Social Security stops for the year once an employee's wages reach the wage base; Medicare has no cap.
An extra 0.9% Additional Medicare Tax is withheld from an employee's wages above $200,000 in the calendar year, whatever their filing status. There is no employer match for the additional tax. Self-employed people pay both halves themselves as self-employment tax, through their own tax return.
Worked example: Two employees in 2026
An employee earning $60,000 has $3,720 Social Security (6.2%) and $870 Medicare (1.45%) withheld for the year, and the employer pays the same $4,590 again.
An employee earning $250,000 hits the wage base partway through the year. Social Security is 6.2% × $184,500 = $11,439. Medicare is 1.45% × $250,000 = $3,625, plus Additional Medicare of 0.9% × $50,000 = $450. The employer pays $11,439 and $3,625, but not the $450.
| Wages | Social Security (each side) | Medicare (employee) | Medicare (employer) |
|---|---|---|---|
| $60,000 | $3,720 | $870 | $870 |
| $250,000 | $11,439 | $4,075 | $3,625 |
In AcboBooks
AcboBooks calculates Social Security and Medicare for employee and employer on every paycheck, stops Social Security at the 2026 wage base using year-to-date totals, applies Additional Medicare above $200,000, and fills the Form 941 worksheet from the quarter's paychecks.
Related terms
Related on this site
Sources
- IRS Publication 15 (2026), Employer's Tax Guide
- Social Security Administration: contribution and benefit base
Updated October 25, 2026. General information, not tax, legal or accounting advice. Rules and rates change; check with the IRS, the CRA, your state or province, or your accountant.
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