FICA: The Tax You Never Chose
Before income tax touches your paycheck, 7.65% is already gone. It funds Social Security and Medicare, it has a cap most people never hit, and your employer quietly pays the same amount again.
Two taxes wearing one name
FICA is really two separate taxes with different rules, which is why the arithmetic surprises people at higher incomes.
Social Security (OASDI) is 6.2% of wages, but only up to a wage base that resets each year — $184,500 in 2026. Every dollar above that is free of the 6.2%. Medicare is 1.45% of all wages with no cap at any income, plus an Additional Medicare Tax of 0.9% on earnings above $200,000 single or $250,000 married filing jointly.
Your employer pays a matching 6.2% and 1.45% that never appears on your paystub. It's real money paid on your behalf — economists generally treat it as part of your compensation.
Self-employment: you are both halves
When you're an employee, you and your employer each pay 7.65%. When you work for yourself, there is no other party — you pay both halves, 15.3% total, as self-employment tax.
Two things soften it. You pay it on net self-employment earnings, after business expenses, not on gross revenue. And you can deduct half of the self-employment tax when computing your adjusted gross income, which roughly restores the treatment an employee gets.
This is the single most common cash-flow shock for people going independent: the same headline income arrives with an extra 7.65% attached and nothing withheld along the way.
6.2% Social Security up to $184,500 in 2026, plus 1.45% Medicare with no cap. Self-employed pay both halves: 15.3%.
Sources
- 2026 Social Security Changes - Fact Sheet (wage base $184,500) — Social Security Administration (2026)
- Contribution and Benefit Base — Social Security Administration (2026)
- Self-Employment Tax (Social Security and Medicare Taxes) — Internal Revenue Service (2026)