This article is for admins who want to learn about FICA taxes and how we calculate them.
FICA stands for the Federal Insurance Contributions Act. It includes two payroll taxes:
Social Security
Medicare
These taxes help support retired workers and people with disabilities. Both employees and employers pay a share of these taxes, based on a percentage of taxable wages.
We handle these tax payments when we withhold them from payroll.
FICA taxes include Social Security and Medicare. Below are the 2026 rates for these payroll taxes. To learn more, visit the IRS website to read about FICA tax rates.
Social Security tax
The total rate is 12.4%. Employers and employees split this rate evenly:
Employer pays 6.2%
Employee pays 6.2%
The 2026 wage base limit is $184,500. Once an employee earns more than this amount, we stop taking out Social Security tax for the year. This limit usually changes each year.
Medicare tax
The total rate is 2.9%. Employers and employees split this rate evenly:
Employer pays 1.45%
Employee pays 1.45%
There is no wage base limit for Medicare tax. It applies to all earnings.
Additional Medicare tax
Employees who earn more than $200,000 a year pay an extra 0.9% in Medicare tax. Employers do not match this extra amount, but they do withhold it from the employee’s pay.
The employee’s W-4 elections only affect the Medicare tax the employee pays. They do not change the amount the employer pays.
Below is an example of how we calculate FICA taxes (Social Security and Medicare) for an employee who earns $200,000 a year. We also include federal and state unemployment taxes to give you the full payroll tax picture.
Meet “Taylor”
Here are the details we use for this example:
Annual salary: $200,000
Year: 2025
Employer: Same employer for the full year
Location: A state with a State Unemployment Insurance (SUI) wage base limit of $10,000
Tax breakdown
Here is how we calculate each payroll tax for Taylor. Items 1 through 3 are FICA taxes.
Social Security tax
2025 wage base limit: $176,100
Rate: 12.4% total (6.2% employee + 6.2% employer)
Result: We tax only the first $176,100 of Taylor’s wages. Earnings above this amount are not taxed for Social Security.
Medicare tax
No wage base limit (Medicare tax applies to all earnings)
Rate: 2.9% total (1.45% employee + 1.45% employer)
Result: We tax the full $200,000 of Taylor’s wages.
Additional Medicare tax
Threshold: Earnings over $200,000
Rate: 0.9% (employee only)
Result: Taylor earns exactly $200,000, so this tax does not apply.
Federal Unemployment Tax Act (FUTA)
Wage base limit: $7,000
Result: We tax only the first $7,000 of Taylor’s wages.
State Unemployment Insurance (SUI)
Wage base limit: $10,000 (varies by state)
Result: We tax only the first $10,000 of Taylor’s wages.
Example calculations
Tax type
Wage base limit
Rate
Taylor’s wages
Wages taxed
Employer share
Employee share
Social Security
$176,100 (2025)
6.2% (employee + employer)
$200,000
$176,100
$10,918.20
$10,918.20
Medicare
No limit
1.45% (employee + employer)
$200,000
$200,000
$2,900.00
$2,900.00
Additional Medicare tax
> $200,000
0.9% (employee only)
$200,000
$0 (does not apply)
N/A
$0
FUTA
$7,000
Employer only
$200,000
$7,000
$420.00
N/A
SUI
$10,000
Varies by state (example 2%)
$200,000
$10,000
$200.00
N/A