FICA stands for the Federal Insurance Contributions Act. These mandatory payroll taxes fund Social Security and Medicare.
Components
| Tax | Employee Rate | Employer Rate | Wage Base (2026) |
|---|---|---|---|
| Social Security | 6.2% | 6.2% | $168,600 |
| Medicare | 1.45% | 1.45% | Unlimited |
| Total | 7.65% | 7.65% | — |
Additional Medicare Tax
High earners pay an extra 0.9% Medicare surtax on income above: - $200,000 (single) - $250,000 (married filing jointly)
Impact on Take-Home Pay
FICA is significant. On a $75,000 salary: - Social Security: $4,650 - Medicare: $1,087.50 - Total FICA: $5,737.50
That's money taken before federal and state income taxes.
Self-Employment
Self-employed individuals pay both the employee AND employer portions (15.3% total), though they can deduct half from gross income.
Why This Matters in Salary Comparisons
Gross salary comparisons can be misleading if one city has much higher rent and tax drag. FICA is the baseline deduction that applies everywhere before local differences.