Every paycheck has more than just income tax taken out of it. FICA (Federal Insurance Contributions Act) tax is a separate, flat-rate payroll tax that funds Social Security and Medicare. Unlike income tax, it ignores the standard deduction, brackets and credits. It's figured on your wages, less only a few payroll deductions such as pre-tax health insurance and HSA money. A 401(k) contribution doesn't lower it.
Social Security: 6.2%, up to a yearly cap
Social Security tax is 6.2% of your wages. But it only applies up to an annual limit called the wage cap — for 2026, that cap is $184,500. Once your year-to-date wages cross that number, Social Security tax stops being withheld for the rest of the year. This is why very high earners sometimes notice their paycheck get slightly bigger later in the year — the Social Security portion simply disappears once they've hit the cap.
Medicare: 1.45%, with no cap at all
Medicare tax is 1.45% of every dollar of wages, with no wage cap. Whether you earn $40,000 or $4 million, every dollar gets the same 1.45% Medicare tax.
The additional 0.9% Medicare surtax
High earners pay an extra 0.9% Medicare surtax on wages above a threshold that depends on filing status:
- Single or Head of Household: wages above $200,000
- Married Filing Jointly: wages above $250,000
- Married Filing Separately: wages above $125,000
This surtax only applies to the amount above the threshold, not your entire wages — the same slice-by-slice idea as income tax brackets. Your employer starts withholding it once your wages pass $200,000, whatever your filing status, and any difference is settled on your tax return.
A worked example
Take a Single filer earning $220,000 in wages for the year. Social Security only applies up to the $184,500 cap, so Social Security tax is $184,500 × 6.2% = $11,439. Medicare applies to the full $220,000, so base Medicare tax is $3,190. Since this filer's wages exceed the $200,000 threshold by $20,000, they also owe an additional Medicare surtax of $20,000 × 0.9% = $180. Total FICA tax for the year: $14,809.
Self-employed workers pay both halves
When you work for an employer, your employer pays a matching share of Social Security and Medicare on your behalf — you never see it, but it's there. If you're self-employed, there's no employer to split the cost with, so you pay both the employee and employer share yourself: 12.4% for Social Security plus 2.9% for Medicare, a combined 15.3%. It applies to 92.35% of your net profit, and the Social Security part stops at the same wage cap. You deduct half of it when figuring your income tax. The self-employment tax guide walks through it.
Overtime still pays FICA
The new no tax on overtime deduction only lowers income tax. Social Security and Medicare still come out of every dollar of overtime pay. The no tax on overtime calculator shows both.