The two pieces of FICA
FICA — the Federal Insurance Contributions Act — is a payroll tax withheld directly from wages. It funds Social Security and Medicare and has two employee components in 2026: 6.2% for Social Security and 1.45% for Medicare, for a combined 7.65% on most wages.
The 2026 Social Security wage base
The 6.2% applies only up to $184,500 of 2026 wages, per the SSA cost-of-living announcement. Earnings above that stop contributing to Social Security for the year — a raise that pushes you past the base produces a visible, temporary bump in net pay late in the year. Medicare has no cap: the 1.45% applies to every dollar.
- Social Security employee share: 6.2% up to $184,500 (max $11,439 in 2026)
- Medicare employee share: 1.45%, no wage cap
- Additional Medicare: 0.9% above $200,000 single / $250,000 joint — employee only
- Employer matches 6.2% + 1.45% but not the 0.9% surtax
What FICA does not cover
FICA is not income tax. It funds specific programs and is withheld on top of federal and state income tax. Pre-tax §125 deductions like health premiums and HSA contributions reduce FICA-taxable wages, which is why they lower both taxes; 401(k) deferrals do not reduce FICA and stay fully taxed at 7.65%.
Self-employed pay double
Independent contractors pay the self-employment tax: the full 15.3% (employee + employer halves) on 92.35% of net earnings, with the same $184,500 Social Security base. Half of the SE tax is deductible above the line. This is the structural reason a $60/hr 1099 rate must beat a comparable W-2 salary to break even.
Updated 2026-09-01 · Sources: IRS Rev. Proc. 2025-32, SSA 2026 COLA fact sheet, Tax Foundation 2026 state tables · Full methodology