Who Pays the Social Security Taxes Levied by FICA?
Understand how financial responsibility for Social Security and Medicare taxes shifts based on your employment status and total annual earnings.
The Federal Insurance Contributions Act (FICA) is a U.S. federal law requiring a payroll tax to fund the Social Security and Medicare programs. These programs provide retirement, disability, survivor, and medical benefits to millions of Americans. The responsibility for paying these taxes varies based on an individual’s employment status. For most workers, the cost is shared with their employer, while self-employed individuals pay the entire amount themselves.
Employee and Employer Contributions
For individuals classified as employees, the financial responsibility for FICA taxes is divided equally between the employee and the employer. The tax has two parts: Social Security, also known as Old-Age, Survivors, and Disability Insurance (OASDI), and Medicare. The Social Security tax rate is 6.2% for both the employee and employer, and the Medicare tax rate is 1.45% for each. Combined, this means the employee and employer each pay 7.65% of the employee’s gross wages.
The employer is responsible for calculating and withholding the employee’s share from each paycheck. The employer then combines the withheld amount with their own matching share and remits the total to the Internal Revenue Service (IRS). For example, an employee with a gross salary of $60,000 would have $4,590 deducted for FICA taxes over the year, and their employer would contribute another $4,590, for a total payment of $9,180 to the government.
Self-Employed Individual Contributions
Individuals who work for themselves, such as independent contractors, are subject to the Self-Employment Contributions Act (SECA). SECA combines the employee and employer FICA tax obligations into a single tax paid by the individual. The tax rates are 12.4% for Social Security and 2.9% for Medicare, totaling 15.3%. This tax is calculated on 92.35% of the net earnings from self-employment, an adjustment reflecting that employees do not pay FICA tax on their employer’s contribution.
A provision for self-employed individuals is the ability to deduct one-half of their total SECA tax paid. This is an adjustment to income, not an itemized deduction, and can be taken regardless of whether the taxpayer itemizes. This deduction lowers the individual’s adjusted gross income (AGI), which can reduce their overall income tax liability.
The Social Security Wage Base Limit
The annual Social Security wage base limit is the maximum amount of earnings subject to the Social Security tax in a given year. For 2025, this limit is $176,100. Once an individual’s earnings exceed this amount, they and their employer (or the individual, if self-employed) stop paying the Social Security tax on any further earnings for the year. The maximum Social Security tax an employee will pay in 2025 is $10,918.20.
This wage cap applies only to the Social Security portion of the payroll tax. The Medicare tax does not have a wage base limit; the 1.45% tax (or 2.9% for self-employed individuals) continues to be applied to all of an individual’s earnings, regardless of how high they are.
Additional Medicare Tax for High Earners
An Additional Medicare Tax of 0.9% applies to individuals with high earnings. This surtax is levied on wages, compensation, and self-employment income above certain thresholds and is paid solely by the individual, with no employer match. The income thresholds, which are not adjusted for inflation, are based on filing status: $250,000 for Married Filing Jointly, $125,000 for Married Filing Separately, and $200,000 for all other filers.
An employer is required to start withholding the 0.9% tax from an employee’s pay once their wages exceed $200,000, regardless of the employee’s filing status. An individual’s final liability is determined on their annual income tax return. A person may owe the tax but not have enough withheld, particularly with multiple jobs or if a spouse’s income pushes them over the joint filing threshold. In these cases, the taxpayer may need to make estimated tax payments or adjust their withholding to cover the liability. The tax is calculated on Form 8959, which is filed with the individual’s Form 1040.