How to Calculate FICA Tax

FICA taxes fund Social Security and Medicare. As an employer, you withhold 6.2% for Social Security and 1.45% for Medicare from each employee's gross wages — then match both from your business budget and deposit the combined total to the IRS on your assigned schedule.  

SurePayroll® By Paychex automates every step.

Checking your own pay stub? See what the FICA deduction means for your paycheck.

What FICA is and why you’re responsible for it

FICA is the federal payroll tax that funds two programs: Social Security and Medicare. Social Security benefits provide retirement income and disability insurance benefits for workers and their families. Medicare programs provide hospital insurance and healthcare coverage for retirees and other qualifying individuals.

Your employer responsibilities are fixed and non-negotiable: calculate FICA for every employee, withhold their portion from each paycheck, contribute your equal employer portion from your business budget, and deposit the combined total to the IRS on your assigned schedule.

You and your employees split the FICA contribution equally: 7.65% of the employee’s gross wages (6.2% for Social Security and 1.45% for Medicare). This applies every pay period, for every employee, throughout the calendar year. FICA is one of your federal payroll taxes, which also include federal income tax withholding and federal unemployment insurance (FUTA).

How to calculate FICA: The withholding formula

FICA is two separate taxes calculated on the same earned income: Social Security tax and Medicare tax. You calculate each independently and withhold both from the employee’s paycheck.

Social Security: The Social Security tax rate is 6.2%. Apply it to each employee’s gross wages up to the Social Security wage base: $184,500 in 2026. Once an employee’s cumulative wages for the calendar year cross that wage base limit, you stop withholding Social Security tax for the rest of the year.  

Medicare: The Medicare tax rate is 1.45% with no wage limit. You calculate this on every dollar of taxable wages your employee earns. The cap that applies to Social Security does not apply here.

Total FICA rate: 6.2% + 1.45% = 7.65%.  

The formula: Gross wages × 7.65% = employee FICA withholding

Example: An employee earns $2,000 in gross wages for a pay period.

•          Social Security portion: $2,000 × 6.2% = $124

•          Medicare portion: $2,000 × 1.45% = $29

•          Total FICA withheld from the employee’s paycheck: $124 + $29 = $153

That $153 is half of the total FICA obligation for this employee. The other half is your match, which you pay from your business budget.  

SurePayroll By Paychex calculates both portions automatically: You enter gross wages and the system applies the rates for every employee.

The employer match: What it means and how it works

Your employer portion is 7.65% of the employee’s gross wages, at the same Social Security and Medicare rates. Pay it from your business budget as a separate cost. It doesn’t reduce the employee’s wages and you don’t include it on their paystub. They only see their 7.65% portion withheld.

Using the $2,000 wage example: withhold $153 from the employee’s paycheck, contribute $153 from your business funds, and deposit $153 + $153 ($306 total) FICA tax to the IRS. That’s the full FICA contribution for that employee for that pay period. Your match is a fixed, equal obligation.

Federal unemployment taxes (FUTA) are a separate employer obligation.  

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Step-by-step FICA calculation examples

Scenario 1: S-corp owner paying yourself

You operate as an S-corp and pay yourself a reasonable salary of $6,000 per month. As an owner-employee, you withhold the employee share of FICA from your paycheck, and the business pays the employer share.

•   Employee portion (withheld from your paycheck): $6,000 × 7.65% = $459

•   Employer portion (from your business budget): $6,000 × 7.65% = $459

•   Total FICA deposit for the pay period: $918

As an S-corp owner-employee, you owe FICA on your wages each time you pay yourself.  

Scenario 2: Hourly employee

An employee works 80 hours in a pay period at $25 per hour.

•     Gross wages: 80 hours × $25 = $2,000

•     Employee FICA withholding: $2,000 × 7.65% = $153

•     Employer FICA contribution: $2,000 × 7.65% = $153

•     Total FICA deposited to the IRS: $306

When and how to deposit FICA taxes

You deposit on a schedule the IRS assigns based on your total tax liability during the lookback period (July 1 of the second preceding year through June 30 of the prior year). Two schedules apply.

Monthly depositors: If your lookback period tax liability was under $50,000, deposit FICA by the 15th of the month following each payroll.

Semi-weekly depositors: If your lookback period liability was $50,000 or more, your deposit timing depends on which days payroll falls. The Form 941 guide has a semi-weekly schedule and lookback period breakdown.

New businesses: Default to the monthly schedule until you have a full year of tax history.

Deposit penalties

Meet your deposit deadlines. Miss one, and IRS penalties start immediately.  

• 2% for one to five days late

• 5% at six to fifteen days

• 10% at sixteen or more days

• 15% if unpaid ten days after an IRS notice  

Unpaid FICA can also trigger a Trust Fund Recovery Penalty, assessed to you personally.

How FICA connects to Form 941

You report your FICA deposits and reconcile your quarterly liability on Form 941.

You file the form quarterly on specific due dates: April 30, July 31, October 31, and January 31. Every FICA calculation you run throughout the quarter feeds into that form: total taxable wages, Social Security withholding, Medicare withholding, and your employer contributions all build toward the totals you report.

When you file Form 941, you reconcile your deposits against what you owe. If you deposited more than you owe, apply the overpayment as a credit or request a refund. If you deposited less, you owe the difference.  

SurePayroll calculates your quarterly FICA totals, deposits taxes on your assigned schedule, and files Form 941 electronically.

FICA on bonuses, tips, and other compensation

FICA applies to most compensation beyond base wages. Bonuses, tips, and commissions all follow the same withholding calculation. The pay type changes but the formula stays the same.

Bonuses and commissions: Subject to FICA at the standard 7.65% withholding rate. Withhold the Social Security and Medicare portions from the bonus amount, match both as the employer, and include the total FICA contribution in your next scheduled deposit.  

Tips: Employees who earn $20 or more in tips per month report those tips to you. You withhold FICA on reported tip income and contribute the employer match (even though the tips came from customers, not from you).

401(k) contributions: FICA applies to an employee’s full gross wages before any 401(k) deferral. These contributions are pretax for federal income tax purposes, but FICA is calculated on gross pay before the deferral reduces taxable income.  

Additional Medicare tax: For employees earning more than $200,000 in a calendar year, you withhold an additional 0.9% on wages above that threshold. This is employee-only: you don’t match the 0.9%. Your employer match stays at 1.45%.

Independent contractors: FICA doesn’t apply to independent contractors who you issue 1099-NECs at year end. You don’t withhold or match FICA for independent contractors. They pay self-employment tax directly to the IRS when they file their tax return.  

If you have a mix of W-2 employees and independent contractors, FICA only applies to your employees.

Overtime: Calculate FICA on total gross pay including overtime. An employee earning $1,000 in regular wages plus $300 in overtime has $1,300 in gross wages for the period. Both the employee withholding and your employer match apply to the full $1,300.  

Automating FICA calculation, deposits, and filing

SurePayroll automates every part of this workflow. You enter gross wages. The system calculates both FICA portions, tracks each employee's cumulative earnings against the Social Security wage base, deposits on your assigned schedule, and files Form 941 each quarter. Every pay period. Every employee.

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