RemotePad Logo

Best Employer of Record (EOR)

Discover the best EOR companies

TOP 10 PEO Companies

Find the best PEO

TOP 10 Payroll Providers

The best payroll companies

Employee Relocation Services

Relocate employees globally

What is an Employer of Record

Hire globally with an EOR

What is a Global PEO

An efficient global hiring solution

What is a PEO

Hire locally with a PEO

Our Methodology

Why you can trust our guides

Work Visas

How to apply for a work visa

Digital Nomad Visas

Get a digital nomad visa

Outsource Recruitment

How to outsource recruitment

Hire Globally

Find international talents

The Startup Hiring Guide: How to Recruit and Hire A+ Talent

2 min read

What Does FICA Stand For: Definition and What it Means for You


FICA, which stands for the Federal Insurance Contributions Act, is an official term for two taxes you’re (probably) already familiar with: Social Security and Medicare. These are taxes that both employers and employees always have to pay.

Here’s how FICA works: Before an employer pays an employee, they withhold FICA taxes from their employee’s paycheck. This is 7.65% of the gross pay for that pay period. Then, the employer also pays the same amount.

Example: If an employee has $50 withheld for FICA taxes, the employer needs to pay another $50 from their own pocket.


FICA tax: Cheat sheet

  • FICA is the only payroll tax that’s the same for everyone. Income and unemployment are the two other types of payroll taxes, but those change depending on the person and business. With FICA, everyone pays 7.65%.
  • Self-employed people have a similar tax. No, there’s no escaping the reach of Social Security and Medicare taxes if you’re self-employed. You’ll pay SECA taxes instead––there’s more information here.
  • There’s an upper limit for Social Security taxes. The majority of FICA taxes are Social Security taxes, which are 6.2% of gross income. But Social Security taxes are capped at the federal wage base of $142,800 in 2021. If you make more than that, you’ll still pay Social Security taxes as if you were making $142,800.

How to calculate FICA taxes

You can calculate FICA taxes in less than a minute. Here’s how:

  1. Figure out an employee’s gross pay for any pay period. Let’s say it’s $3,500.
  2. Take 7.65% from that. In this case, it’s $267.75.

If you are an employee: That’s it. Now you know how much you’ll be paying in FICA taxes.

If you are an employer: You’ll have to withhold that amount from your employee’s paycheck and match their amount––so, $267.75––yourself for your own portion of the FICA tax.

You’re probably not exempt from FICA tax

In some way or another, everyone pays FICA taxes. Here are the details.

As an employer: If you hire freelancers (independent contractors), you won’t withhold FICA taxes, or other payroll taxes, from their paycheck.

As an employee: Remember, if you’re self-employed, you pay SECA taxes. The group of people who don’t have to pay FICA taxes at all is a very small one, the primary category being active students who are being paid by a university.

What FICA means on your paycheck

You might’ve come here just for this. And if you did, all FICA means on your paycheck is the portion of money that’s being withheld for Social Security and Medicare. Social Security makes up 6.2% and Medicare makes up 1.45% for a total of 7.65%.

At RemotePad, Lech draws on his professional experience to write about employment taxes and payroll (both remote, and in-office). Lech holds a Bachelors’ degree from the University of Kent, a Master of Arts (MA) from Kings College London, and professional payroll and tax qualifications. He is the founder of both and and has 20 years experience advising on all manner of tax and business planning matters.