What Are FICA Taxes?
FICA stands for the Federal Insurance Contributions Act. It is the federal law that requires both employees and employers to contribute to two essential social safety-net programs: Social Security and Medicare. Unlike federal income tax — which varies based on income, filing status, and deductions — FICA taxes are applied at flat rates up to certain thresholds.
How FICA Is Split Between Employee and Employer
FICA is a shared responsibility. Both the employee and the employer each pay a portion of the total tax.
| Tax | Employee Rate | Employer Rate | Combined |
|---|---|---|---|
| Social Security | 6.2% | 6.2% | 12.4% |
| Medicare | 1.45% | 1.45% | 2.9% |
| Total FICA | 7.65% | 7.65% | 15.3% |
For self-employed individuals, the entire 15.3% is their responsibility — though they can deduct half of it on their federal income tax return.
Social Security Wage Base Cap
Social Security tax applies only up to a wage base limit, which is adjusted annually by the IRS. Once an employee's cumulative wages for the year exceed this threshold, no further Social Security tax is withheld for that year. Medicare tax, however, has no wage cap — it applies to all earnings.
Check the IRS website or Publication 15 (Circular E) each year for the current Social Security wage base.
Additional Medicare Tax
High earners face an additional 0.9% Medicare surtax on wages above the following thresholds:
- $200,000 for single filers
- $250,000 for married filing jointly
- $125,000 for married filing separately
Employers are required to withhold this additional tax once an individual employee's wages exceed $200,000 in a calendar year — regardless of the employee's filing status. Any reconciliation happens when the employee files their personal tax return.
Employer Obligations for FICA
As an employer, your FICA responsibilities include:
- Withholding the employee's share of FICA from each paycheck
- Matching the employee's contribution with your own employer share
- Depositing both portions with the IRS on a timely basis (via EFTPS)
- Reporting FICA taxes quarterly on Form 941
- Reconciling annual totals on W-2 forms issued to employees
FICA Deposit Schedules
The IRS assigns employers a deposit schedule based on their payroll tax liability during a lookback period. There are two primary schedules:
- Monthly depositors: Deposit by the 15th of the following month
- Semi-weekly depositors: Deposit within 3 business days of payroll (Wednesday or Friday, depending on payday)
Businesses with very small tax liability may qualify to pay annually with Form 944 instead of quarterly Form 941. Confirm your schedule each year using IRS guidance.
FICA Exemptions
Not all workers are subject to FICA. Common exemptions include:
- Certain student workers employed by the school they attend
- Some nonresident aliens on specific visa types
- Certain religious order members
- Independent contractors (who pay self-employment tax instead)
Penalties for Non-Compliance
Failing to deposit FICA taxes on time carries penalties that increase the longer the delay — ranging from 2% for deposits 1–5 days late up to 15% for amounts unpaid more than 10 days after an IRS notice. Willful failure to remit payroll taxes can even result in personal liability through the Trust Fund Recovery Penalty (TFRP).
Key Takeaway
FICA taxes are a non-negotiable part of running payroll. Understanding the rates, wage caps, deposit schedules, and reporting requirements ensures you stay compliant and avoid penalties. When in doubt, consult a payroll professional or tax advisor.