The Federal Insurance Contributions Act (FICA) comprises Social Security and Medicare taxes. Its purpose is to support retired workers and the disabled. The tax is determined based on fixed percentages of taxable wages and is contributed by both the employee and the employer.
The rates for 2024 are as follows. Further details about these rates can be found on the IRS website.
- Social Security rate: Total of 12.4%
- Employer's share: 6.2%
- Employee's share: 6.2%
- Wage base limit: $168,600
- Medicare rate: Total of 2.9%
- Employer's share: 1.45%
- Employee's share: 1.45%
Social Security
Social Security has a wage base limit that often experiences yearly increments. Once an employee reaches the Social Security wage base limit within the calendar year, additional wages are no longer subject to Social Security tax calculation.
Medicare
From 2013 onwards, an additional 0.9% Medicare tax will be applied to employees with yearly wages exceeding $200,000. Employers aren't obliged to match this extra tax, but they are responsible for deducting it from eligible employees' earnings.
Note: An employee's filing status influences the extra Medicare tax owed, while the employer's owed amount remains unaffected.