How Is the Employee’s Portion of FICA Tax Paid?
Learn the complete process of how your employee FICA tax is handled, from paycheck deduction to government remittance.
The Federal Insurance Contributions Act (FICA) tax is a mandatory U.S. federal payroll tax that funds Social Security and Medicare programs. This contribution is required for most working individuals in the United States.
Components and Purpose of FICA
FICA tax consists of two main components: Social Security tax and Medicare tax. Social Security tax, also known as Old Age, Survivors, and Disability Insurance (OASDI), provides benefits to retirees, disabled individuals, and eligible family members. The Medicare tax helps fund healthcare.
Both employees and employers contribute to FICA. The Social Security tax rate for employees is 6.2% of their wages, up to an annual wage base limit, which is $176,100 for 2025. The Medicare tax rate for employees is 1.45% of all eligible compensation, with no wage base limit.
An additional Medicare tax of 0.9% applies to an employee’s wages exceeding $200,000 in a calendar year, regardless of filing status. This additional tax is solely the employee’s responsibility. The combined employee FICA tax rate is 7.65% (6.2% Social Security + 1.45% Medicare) on wages up to the Social Security wage base limit, and 1.45% Medicare tax on wages above that limit, plus the 0.9% additional Medicare tax if applicable.
Withholding Employee FICA Contributions
An employee’s share of FICA taxes is not paid directly by the individual to the government. Instead, employers are legally obligated to automatically withhold these contributions from an employee’s gross wages with each paycheck. This withholding is a mandatory payroll deduction.
Employees can verify these deductions by reviewing their pay stubs, where FICA tax withholdings are itemized. The employer acts as an intermediary, collecting the employee’s share before remitting it to the appropriate federal agencies.
Employer’s Responsibility for Remittance
After withholding the employee’s FICA contributions, employers have a legal obligation to remit these collected taxes to the U.S. Treasury, which then directs them to the Social Security Administration and the federal government’s Medicare trust. Employers also contribute their own matching portion of FICA taxes, equal to the employee’s contribution for Social Security and regular Medicare.
These funds are typically deposited electronically to the Internal Revenue Service (IRS) on a regular schedule, usually monthly or semi-weekly, depending on the employer’s total tax liability. Most employers report these FICA payments quarterly using Form 941, Employer’s Quarterly Federal Tax Return. This form provides a comprehensive overview of the employer’s payroll tax liabilities and payments, including both the employee and employer shares of FICA.
Tracking and Documenting FICA Payments
Employees can track their FICA contributions through several methods. Pay stubs serve as immediate records, detailing the FICA taxes withheld from each paycheck. For a comprehensive annual summary, employees receive Form W-2, Wage and Tax Statement, from their employer at the end of each calendar year.
Form W-2 is crucial for verifying FICA contributions. Specifically, Box 4 on Form W-2 reports the total Social Security tax withheld from wages, while Box 6 reports the total Medicare tax withheld. These boxes indicate the amounts an employee has contributed to these federal programs throughout the year. The information on the W-2 is vital as proof of contributions to the Social Security Administration, which uses this data to determine eligibility and benefit amounts for future Social Security and Medicare benefits.