Social Security & Medicare
FICA taxes, Social Security limits, and Medicare withholding
Are FICA taxes calculated on pre-tax deductions?
Most pre-tax deductions do NOT reduce FICA taxes. Your 401(k), health insurance, and FSA contributions are still subject to Social Security (6.2%) and Medicare (1.45%) taxes, even though they reduce federal and state income taxes. Only a few specific deductions like parking and transit benefits reduce FICA liability.
Are FICA taxes ever refundable?
FICA taxes are refundable in specific situations: excess Social Security tax from multiple employers (2026 limit: $10,918.20), overpaid taxes on tips, certain visa holders, and students working for their school. Most workers earning under $176,100 from one employer cannot get FICA refunds.
At what income does the Additional Medicare Tax kick in?
The Additional Medicare Tax of 0.9% kicks in at $200,000 for single filers and $250,000 for married filing jointly. Your employer must withhold this extra tax once your wages exceed these thresholds, regardless of your total household income or filing status.
Can I opt out of Social Security tax?
No, most employees cannot opt out of Social Security tax. All W-2 employees pay 6.2% on wages up to $176,100 (2026). Only certain religious groups and some government workers hired before 1984 have exemptions.
Do I get a refund if I overpay Social Security tax?
Yes, you get a refund for overpaid Social Security tax when you file your tax return. For 2026, Social Security tax stops at $176,100 in wages. If multiple employers withheld Social Security tax beyond this limit, the IRS will refund the excess as a credit on your return.
Do I pay FICA on 401(k) contributions?
No, you still pay full FICA taxes on 401(k) contributions. If you earn $100,000 and contribute $10,000 to your 401(k), you pay FICA on the full $100,000 — that's $7,650 in Social Security and Medicare taxes, not $6,885 on the reduced $90,000.
Do I pay FICA on HSA employer contributions?
No, you do not pay FICA taxes on HSA employer contributions. These contributions are exempt from both Social Security (6.2%) and Medicare (1.45%) taxes, saving you approximately $765 annually on the maximum 2026 employer HSA contribution of $8,550 for family coverage.
Do self-employed people pay more FICA tax?
Yes, self-employed people pay 15.3% in self-employment tax (double the 7.65% FICA rate for employees) because they cover both the employee and employer portions. However, they can deduct half of this tax, reducing the effective rate to approximately 14.13%.
Does my employer match my FICA taxes dollar for dollar?
Yes, employers match your FICA taxes dollar-for-dollar up to the Social Security wage base ($176,100 in 2026). You pay 6.2% Social Security + 1.45% Medicare, and your employer pays the same 7.65%. However, high earners pay additional Medicare tax (0.9%) that employers don't match.
How are FICA taxes calculated on bonuses?
FICA taxes on bonuses are calculated the same as regular wages: 6.2% Social Security + 1.45% Medicare (7.65% total). However, if your year-to-date wages plus bonus exceed $176,100, Social Security tax stops at that limit. High earners may also owe 0.9% additional Medicare tax on bonuses.
How are FICA taxes calculated on stock compensation?
FICA taxes (7.65% employee + 7.65% employer) apply to stock compensation based on fair market value at vesting for RSUs, spread at exercise for options, and discount for ESPP. For 2026, Social Security tax stops at $176,100 of combined wages and stock income.
How do I check my Social Security benefits estimate?
Create a my Social Security account at ssa.gov to view your official benefits estimate. Your statement shows projected monthly payments at ages 62, full retirement age (67 for most workers), and 70, plus your complete earnings history used to calculate benefits.
How do I get a Social Security tax refund from two jobs?
If two employers withheld Social Security tax on combined wages over $176,100 (2026 limit), you overpaid. File Form 1040 to claim the excess as a refundable credit on Line 71. The IRS will refund the overpayment, typically within 21 days of e-filing.
How do tips affect FICA calculations?
Tips are subject to full FICA taxes (15.3% combined employer and employee portion) just like regular wages. If you earn $30,000 in tips annually, you'll owe $2,295 in employee FICA taxes, and your employer owes another $2,295. The key difference: tip income often requires catch-up withholding if your base pay is too low to cover the taxes owed.
How does FICA tax affect my take-home pay?
FICA tax reduces your take-home pay by 7.65% of your gross wages (6.2% Social Security + 1.45% Medicare). On a $60,000 salary, FICA takes $4,590 annually, or about $176 from each biweekly paycheck, leaving you with $55,410 in gross pay before other taxes.
How does FICA tax work for household employees?
You pay employer FICA taxes if you pay a household employee $2,700+ in 2026. Both you and the employee pay 7.65% each (total 15.3%). If you pay your nanny $30,000/year, you owe $2,295 in employer FICA taxes plus $945 in federal unemployment tax.
How does having two jobs affect my Social Security tax?
When you have two jobs, both employers withhold Social Security tax (6.2%) up to the 2026 wage base of $176,100 combined. If your total wages exceed this limit, you'll get a refund for excess Social Security tax withheld when you file your return.
How does the Medicare surtax work with investment income?
The Medicare surtax includes two separate taxes: 0.9% Additional Medicare Tax on wages over $200K ($250K married), and 3.8% Net Investment Income Tax (NIIT) on investment income when modified AGI exceeds the same thresholds. Both can apply simultaneously, potentially adding 4.7% in Medicare-related taxes for high earners.
How does Social Security tax work for government employees?
Most government employees hired after 1983 pay Social Security taxes at the standard 6.2% rate on wages up to $176,100 (2026). However, some federal employees in CSRS and certain state/local workers may be exempt from Social Security taxes but still pay Medicare taxes at 1.45%.
How much Social Security tax will I pay on a $200,000 salary?
On a $200,000 salary, you'll pay $10,918.20 in Social Security tax (6.2% on the first $176,100 in 2026). You pay nothing on the remaining $23,900 since Social Security tax stops at the wage base limit of $176,100.
How much Social Security tax will I pay on a $300,000 salary?
On a $300,000 salary, you'll pay $10,918.20 in Social Security tax — the same as someone earning $176,100. Social Security tax caps at the 2026 wage base limit, so you pay nothing on the $123,900 above that threshold, giving you an effective rate of just 3.64%.
How much will I get from Social Security when I retire?
Your Social Security retirement benefit depends on your 35 highest-earning years and when you retire. The average retiree receives $1,907 monthly in 2026, but someone earning $75,000 annually for 35 years would receive about $2,100-$2,400 monthly at full retirement age.
Is FICA the same as federal income tax?
No, FICA and federal income tax are separate deductions. FICA is 7.65% that funds Social Security and Medicare benefits. Federal income tax varies by income and filing status — typically 12-22% for middle-class earners. On a $70,000 salary, you'd pay about $5,356 in FICA and roughly $8,000-12,000 in federal income tax.
What are FICA taxes and how much do I pay?
FICA taxes are 7.65% of your wages (6.2% for Social Security + 1.45% for Medicare). Your employer matches this, paying another 7.65%. On a $60,000 salary, you pay $4,590 annually in FICA taxes, or about $176 per biweekly paycheck.
What does FICA stand for?
FICA stands for Federal Insurance Contributions Act. It's the 7.65% payroll tax that funds Social Security (6.2%) and Medicare (1.45%). On a $60,000 salary, FICA takes $4,590 annually — but your employer matches this amount, contributing another $4,590 to your future benefits.
What if my two employers both withhold full Social Security tax?
If your combined wages exceed the $176,100 Social Security wage base, both employers withholding full Social Security tax creates overpayment. You'll receive a refund for the excess when filing your return. If under the wage base, both withholding full tax is correct.
What income is exempt from FICA taxes?
Income exempt from FICA taxes includes employer HSA contributions, certain fringe benefits, and deferred compensation. Additionally, Social Security tax stops at $176,100 in 2026, while Medicare tax continues on all wages with an additional 0.9% tax on earnings over $200,000 ($250,000 married filing jointly).
What is the Additional Medicare Tax for high earners?
Additional Medicare Tax is an extra 0.9% tax on wages over $200,000 (single) or $250,000 (married filing jointly). On a $300,000 salary, you'd pay an additional $900 in Medicare taxes ($100,000 × 0.9%), bringing your total Medicare tax rate to 2.35% on income above the threshold.
What is allocated tips on my W-2?
Allocated tips on your W-2 (Box 8) are tips your employer assigned to you when the total reported tips at your workplace were less than 8% of gross receipts. For a restaurant with $500,000 in sales, employees must collectively report at least $40,000 in tips annually or face allocation.
What is the maximum Social Security benefit for 2026?
The maximum Social Security benefit for 2026 is approximately $4,873 per month ($58,476 per year) at full retirement age, or $5,108 per month ($61,296 per year) if you delay until age 70. This requires earning at or above the Social Security wage base for 35+ years.
What is the Medicare tax rate for 2026?
The Medicare tax rate for 2026 is 1.45% for employees and 1.45% for employers (2.9% total). High earners pay an additional 0.9% Medicare surtax on income over $200,000 (single) or $250,000 (married filing jointly). Unlike Social Security, there's no wage limit on Medicare tax.
What is the Net Investment Income Tax and how does it relate to Medicare?
The Net Investment Income Tax (NIIT) is a 3.8% tax on investment income that applies when your modified adjusted gross income exceeds $200,000 (single) or $250,000 (married filing jointly). Created by the Affordable Care Act, it generates revenue for Medicare but is separate from the 1.45% Medicare tax on wages.
What is OASDI on my pay stub?
OASDI stands for Old-Age, Survivors, and Disability Insurance — it's the official name for Social Security tax. You pay 6.2% of wages up to $176,100 (2026 limit). On a $50,000 salary, OASDI costs $3,100 per year or about $119 per biweekly paycheck.
What is the Social Security tax rate for 2026?
The Social Security tax rate for 2026 is 6.2% for employees, with employers paying an additional 6.2%. This applies to wages up to $176,100 (the 2026 wage base limit). For example, someone earning $60,000 pays $3,720 in Social Security tax annually.
What is the Social Security wage base for 2026?
The Social Security wage base for 2026 is $176,100. This means you'll pay 6.2% Social Security tax on earnings up to $176,100 per year. If you earn more than this amount, you won't pay Social Security tax on the excess income.
What is the employer portion of FICA taxes?
Employers pay FICA taxes equal to what's deducted from your paycheck: 6.2% Social Security + 1.45% Medicare = 7.65% total. On a $75,000 salary, you pay $5,737.50 in FICA taxes, and your employer pays an additional matching $5,737.50, for a combined $11,475 contribution.
What is the nanny tax?
The nanny tax requires you to pay Social Security and Medicare taxes (7.65% employer portion plus 7.65% employee portion) when you pay a household employee $2,700 or more in 2026. You're also responsible for federal unemployment tax (FUTA) at 6% on the first $7,000 of wages, though credits can reduce this to 0.6%.
What is the Windfall Elimination Provision?
The Windfall Elimination Provision (WEP) reduces Social Security benefits by up to $587 per month in 2026 for people who receive pensions from jobs where they didn't pay Social Security taxes. It affects roughly 2 million beneficiaries, primarily government employees, teachers, and some private sector workers with non-Social Security covered pensions.
When do I stop paying Social Security tax during the year?
You stop paying Social Security tax once your year-to-date earnings reach $176,100 (the 2026 wage base). For someone earning $200,000, this typically happens in early December. The exact timing depends on your salary, pay schedule, and any bonuses received.
Why did my paycheck go up in the middle of the year?
Your paycheck likely increased because you hit the Social Security wage cap ($176,100 in 2026). Once you earn this amount, the 6.2% Social Security tax stops being deducted from your paychecks, giving you an extra $325-400+ per paycheck depending on your salary and pay frequency.