FICA stands for the Federal Insurance Contributions Act, the law that requires workers and employers to fund Social Security and Medicare. Every paycheck, 7.65% of your gross wages goes to FICA — 6.2% for Social Security and 1.45% for Medicare — and your employer matches that amount. If you are self-employed, you pay both halves, a total of 15.3%, though you can deduct the employer half when calculating your income tax.
Social Security tax and the wage base cap
The 6.2% Social Security tax applies only to wages up to the annual wage base, which is adjusted for inflation each year. For 2025, the cap is approximately $168,600. If you earn more than that, you stop paying Social Security tax on wages above the cap, which means your take-home pay increases slightly for the rest of the year once you hit the threshold. The cap does not apply to Medicare tax. Social Security benefits in retirement are calculated from your highest 35 years of earnings, so the tax you pay now funds both current retirees and your own future benefit.
Medicare tax and the additional Medicare surtax
The 1.45% Medicare tax applies to all wages with no cap. If you are a high earner — single filers making over $200,000 or joint filers over $250,000 — you pay an additional 0.9% Medicare surtax on wages above that threshold. Your employer withholds the extra 0.9% once your year-to-date wages cross $200,000, regardless of your filing status, so if you are married and your combined income is under $250,000 you can claim a refund of the surtax when you file. The surtax was added in 2013 to help fund the Affordable Care Act.
FICA on bonuses, commissions, and tips
FICA applies to all wages, including bonuses, commissions, and reported tips. If you receive a $10,000 bonus, $765 goes to FICA before income tax withholding is calculated. For tipped employees, you are required to report cash tips to your employer if they total $20 or more in a month, and your employer withholds FICA on the reported amount. If your tips plus base wage push you above the Social Security wage cap, the 6.2% Social Security tax stops but the 1.45% Medicare tax continues.
Why FICA is not refundable
Unlike income tax withholding, which is reconciled on your tax return and refunded if you overpaid, FICA is a flat payroll tax with no refund mechanism. The only exception is if your employer withheld too much Social Security tax because you switched jobs mid-year and your combined wages exceeded the cap — in that case you claim the excess as a credit on Form 1040. For most workers, the FICA amount on your final paycheck stub matches the amount on your W-2, and that is the amount you paid for the year. Mora's transaction categorization automatically tags your paycheck deposits and withholding, so you can see your year-to-date FICA total and compare it to the cap without building a spreadsheet.
