What is FICA? , Social Security Administration Social Security History FAQs , Social Security Administration Social Security and Medicare Tax Rates , Social Security Administration Social Security and Medicare Withholding Rates , IRS Additional Medicare Tax , IRS Contribution and Benefit Base , Social Security Administration If You Are Self-Employed , Social Security Administration “ Trust Fund Financial Operations in 2025, ” 2026 OASDI Trustees Report, Social Security Administration “Social Security Coverage of State and Local Government Employees,” Congressional Research Service

What Is FICA? Is It the Same as Social Security?

How U.S. workers support the national retirement system and earn their future benefits

5-minute read

Part of Series: Funding and Future

Phil Pruitt,

AARP

Expert reviewed by

Stephen Richardson

Published October 09, 2026

Phil Pruitt is an AARP writer and editor focusing on Social Security. He is a former editor at Scripps News and Yahoo News and was on the start-up staff at USA Today, where he held numerous editing positions.

Stephen Richardson is a retired New England regional communications director for the Social Security Administration and AARP consultant on Social Security benefit issues. He began his career with the agency in 1982 as a claims representative.

Key takeaways

FICA, which stands for Federal Insurance Contributions Act, is the mandatory tax on most U.S. workers’ wages that largely funds Social Security.
Employers and employees split the 12.4 percent payroll tax, each paying 6.2 percent.
In 2026, work income up to $184,500 is subject to the Social Security tax.

FICA is not the same as Social Security, but it is inextricably linked to it. FICA stands for the Federal Insurance Contributions Act, and it refers to the payroll taxes that largely fund Social Security. FICA taxes also provide a chunk of Medicare’s budget. Paying those taxes for a set period — typically 10 years — qualifies you for both, once you reach the age of eligibility.

FICA requires your employer to withhold these taxes from your earnings. The current rate is 12.4 percent of gross pay for the portion of FICA that supports Social Security. You and your employer split the tax at 6.2 percent each. (It works differently if you’re self-employed; see below.)

FICA is what makes Social Security a self-funded, pay-as-you-go system. Current tax revenue pays for today’s benefits for retirees, people with qualifying disabilities, and eligible family members such as spouses, ex-spouses and dependent children. Tomorrow’s workers will cover your Social Security payments when you retire down the road.

Here’s what else you need to know about how FICA relates to Social Security.

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How FICA has evolved

A dedicated payroll tax for funding Social Security was included in the Social Security Act of 1935, but it was not called FICA. That came in 1939, when, among other amendments to the original law, Congress embedded the Federal Insurance Contributions Act in the Internal Revenue Code.

Payroll tax withholding for Social Security began in January 1937 at a rate of 2 percent, split evenly between employees and employers and applied to annual income up to $3,000. Congress incrementally raised the rate several times in the 1950s, then expanded FICA to help fund Medicare when it was established in the mid-1960s.

The current combined FICA rate, set in 1990, is 15.3 percent of gross pay — 12.4 percent for Social Security and 2.9 percent for Medicare. As with Social Security, you and your employer split the Medicare portion at 1.45 percent each. Those taxes support Medicare Part A, the part of Medicare that covers hospitalization.

These taxes show up on your pay stub in various ways. For the Social Security tax, designations include Social Security, SS, OASDI (for Social Security’s formal name, Old-Age, Survivors, and Disability Insurance) and FICA-SS. The Medicare tax may be designated Medicare, MED, HI (for Hospital Insurance) and FICA-Med.

How the taxable maximum works

The Social Security share of FICA is not applied to all wages. It’s subject to a limit that is officially called the “contribution and benefit base” but is more commonly known as the taxable maximum. The cap is adjusted annually based on changes in the national average wage. In 2026, you’ll pay Social Security taxes on work income up to $184,500. Wages above that level are not taxed for Social Security.

There’s no such limit on the Medicare share of FICA — that 2.9 percent tax is applied to all work income. Higher earners pay an “Additional Medicare” tax of 0.9 percent on wages above $200,000 for a single taxpayer or head of household and $250,000 for spouses who file jointly. While the basic Medicare tax is split between workers and employers, the additional tax is not — only employees pay it.

The FICA tax is only withheld from work earnings. It does not apply to other forms of income such as pensions, annuities, veterans benefits, and interest and dividends on savings and investments.

How it works if you’re self-employed

If you are a consultant, freelancer or gig worker or own your own business, you don’t pay FICA tax on income from that work. Rather, you pay into Social Security and Medicare through a different tax called SECA (for Self-Employment Contributions Act).

Unlike FICA, which is collected through payroll withholding, you pay SECA taxes via your federal tax return, by filing a Schedule C (Form 1040) to report profit or loss from self-employment and using Schedule SE (Form 1040) to calculate your Social Security and Medicare taxes.

Because you are both employer and employee in this situation, you are responsible for paying the entire tax — 12.4 percent on net (not gross) income from your business up to $184,500, and 2.9 percent on all net income. But the tax code allows you to deduct one-half of the SECA tab from your overall taxable income.

Do all workers pay into Social Security?

Just about. The Congressional Research Service (CRS) estimates that 93 percent of U.S. workers are "covered" by Social Security, meaning they pay into the system via FICA or SECA taxes. In 2025, those contributions totaled $1.32 trillion, accounting for 91 percent of Social Security’s revenue.

There are small pockets of “non-covered” employment, mostly in the public sector. These include:

State, county and municipal employees whose agencies have opted out of Social Security. About a quarter of state and local governments workers are non-covered, most of them police officers, firefighters and teachers, according to the CRS.
U.S. government employees who were hired before 1984, the year federal agencies came under the Social Security umbrella.
Railroad employees, who are covered by a separate pension system that came into being in the 1930s.
Foreign nationals who work in the U.S. for their home governments or for some international organizations, such as the United Nations.

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