What are Social Security and Medicare Taxes?

Social Security (OASDI) and Medicare (HI) taxes are payroll taxes that fund Social Security retirement, disability, and survivor benefits, as well as Medicare health insurance. Together, these are known as FICA taxes (Federal Insurance Contributions Act).

Why Both Employee and Employer Pay

FICA taxes are split equally between employee and employer. You pay 6.2% for Social Security (up to the wage base) and 1.45% for Medicare, totaling 7.65%. Your employer pays a matching 7.65%. This means the total payroll tax cost for your job is 15.3% of your wages (up to the Social Security wage base). The employer portion is a cost to your employer and is not deducted from your paycheck.

Social Security Wage Base Concept

Social Security tax has a wage base limit - the maximum amount of wages subject to Social Security tax each year. For 2024, it's $168,600, and for 2025, it's $176,100. Once your wages exceed this amount, no additional Social Security tax is withheld. However, Medicare tax continues on all wages with no cap.

Additional Medicare Tax Basics

High earners pay an additional 0.9% Medicare tax on wages above certain thresholds ($200,000 for single filers, $250,000 for married filing jointly, etc.). This is employee-only (employers don't pay it) and applies in addition to the regular 1.45% Medicare tax. It was introduced as part of the Affordable Care Act.

Why Actual Results May Differ

This simplified calculator does not account for all factors that affect actual payroll calculations, including: pre-tax deductions (401(k), health insurance, HSA), multiple jobs and wage base coordination, timing of income, state-specific rules, employer-specific policies, and many other complexities. Actual payroll calculations may vary based on these and other factors.