What Is the Meaning of FICA EE Tax?
Understand how the FICA EE tax deduction is determined. This guide covers its separate components, their specific rates, and how wage levels affect the final amount you pay.
The “FICA EE Tax” on your pay stub is a mandatory U.S. federal payroll tax from the Federal Insurance Contributions Act (FICA). The “EE” signifies the employee’s share, withheld from your gross wages by your employer to fund social insurance programs. Your employer remits these withheld amounts, along with their own share, to the Internal Revenue Service (IRS).
The Two Components of FICA Tax
The FICA tax is composed of two separate parts that fund different government programs. The first component is the Social Security tax, sometimes referred to as the Old-Age, Survivors, and Disability Insurance (OASDI) tax. This portion is used to pay for retirement, disability, and survivor benefits. For 2025, the employee tax rate for Social Security is 6.2%.
This Social Security tax only applies up to a certain amount of your annual earnings. This earnings cap is known as the wage base limit, which is adjusted almost every year for inflation. For 2025, the Social Security wage base limit is $176,100. Once your year-to-date earnings exceed this amount, the 6.2% Social Security tax is no longer withheld from your paychecks for the remainder of the year.
The second component of the FICA tax is for Medicare. This tax funds the nation’s hospital insurance program for individuals aged 65 or older and for some younger people with specific disabilities. The employee tax rate for Medicare is 1.45% of your earnings, and unlike Social Security, there is no annual wage base limit for this tax.
Calculating Your FICA EE Tax Liability
The total FICA tax rate for an employee is 7.65%, which is the sum of the Social Security and Medicare rates. This combined rate is applied to your earnings on each payday until you reach the annual Social Security wage base limit. After your income surpasses the $176,100 limit for 2025, only the 1.45% Medicare tax continues to be withheld.
For example, an employee who earns $80,000 per year is below the 2025 Social Security wage limit, so their entire salary is subject to both taxes. The Social Security tax withheld for the year would be $4,960 ($80,000 x 6.2%). The Medicare tax withheld would be $1,160 ($80,000 x 1.45%). In total, the employee’s FICA EE tax liability for the year would be $6,120.
The financial responsibility for FICA is shared between the employee and the employer. Your employer is required to make a matching contribution, known as FICA ER tax, for both Social Security and Medicare. This means your employer also pays 6.2% for Social Security on your wages up to the limit and 1.45% for Medicare on all your wages. This results in a total FICA contribution of 15.3% of your eligible earnings being sent to the government.
The Additional Medicare Tax
For higher-income earners, there is an Additional Medicare Tax on employee earnings that exceed specific annual income thresholds. The tax rate for the Additional Medicare Tax is 0.9%. This amount is added to the standard 1.45% Medicare tax, bringing the total Medicare tax rate on earnings above the threshold to 2.35%.
These thresholds are determined by your tax filing status. For 2025, the 0.9% tax applies to wages over $200,000 for Single or Head of Household filers, $250,000 for Married Filing Jointly, and $125,000 for Married Filing Separately. Your employer is required to begin withholding this extra tax once your wages for the year exceed the $200,000 mark, regardless of your filing status.
The Additional Medicare Tax is paid only by the employee. Unlike the regular Social Security and Medicare taxes, there is no corresponding employer match for this 0.9% tax. The responsibility for this additional amount rests solely with the high-income employee.