Definition
The payroll taxes that fund Social Security and Medicare, withheld from every paycheck: 6.2% for Social Security (up to an annual wage cap) plus 1.45% for Medicare, 7.65% total. Your employer pays a matching 7.65% on top; self-employed people pay both halves as self-employment tax.
Why it matters
FICA is why take-home pay drops before income tax even enters the picture, and it applies from the first dollar, with no standard deduction. It is also why net pay jumps mid-year for high earners: Social Security withholding stops once wages pass the annual cap.
Example
On a $60,000 salary, FICA withholding runs $3,720 for Social Security and $870 for Medicare, $4,590 for the year, and the employer quietly sends in another $4,590. A freelancer earning the same $60,000 owes both sides themselves.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.