FICA stands for the Federal Insurance Contributions Act, which is a U.S. federal payroll tax that is deducted from each paycheck. It helps fund both Social Security and Medicare programs, which provide benefits for retirees, the disabled, and children. The FICA tax consists of two parts: Social Security or Old Age Survivors, and Disability Insurance (OASDI), and Hospital Insurance for senior citizens and the disabled also known as Medicare (Med). The amounts deducted are set annually by the Social Security Administration (SSA). The money you pay in taxes is not held in a personal account for you to use when you get benefits. Today’s workers help pay for current retirees’ and other beneficiaries’ benefits. Any unused money goes to the Social Security trust funds to help secure today and tomorrow for you and your family.

The FICA tax is composed of two parts: Social Security tax and Medicare tax. The Social Security tax is 6.2% of your gross wages, and the Medicare tax is 1.45% of your gross wages. Your employer matches these percentages for a total of 15.3%.

On your paycheck, you will see the amount of FICA tax withheld, which includes the Social Security tax and the Medicare tax. The amount of FICA tax withheld is based on your gross wages.