Social Security & Medicare Taxes: What Every Worker Needs to Know (2026)
Two lines on your pay stub — Social Security and Medicare — may seem small individually, but together they represent 7.65% of every dollar you earn (up to a cap). For a $70,000/year worker, that's over $5,355 per year. Yet most workers have only a vague understanding of what these taxes are, where they go, and what they get in return. This guide covers everything you need to know for 2026.
What Are FICA Taxes?
FICA stands for the Federal Insurance Contributions Act. It encompasses two separate taxes that fund two distinct federal programs:
- Social Security (OASDI): Funds retirement benefits, disability insurance (SSDI), and survivor benefits for eligible workers and their families.
- Medicare (HI): Funds hospital insurance (Medicare Part A) for Americans aged 65 and over, and certain disabled individuals.
Unlike federal income tax, FICA taxes are not progressive. Everyone with wages — from a part-time minimum-wage worker to a six-figure executive — pays the same flat percentage up to the respective caps.
2026 FICA Rates at a Glance
| Tax | Employee Rate | Employer Match | Wage Cap |
|---|---|---|---|
| Social Security | 6.2% | 6.2% | $176,100 |
| Medicare | 1.45% | 1.45% | No cap |
| Additional Medicare Tax | 0.9% | None | Over $200,000 (single) |
| Total Employee FICA | 7.65% | 7.65% | Up to SS cap |
Social Security Tax: The Wage Base Explained
Social Security tax applies only to wages up to the 2026 wage base of $176,100. Once your cumulative wages for the year exceed this threshold, Social Security withholding stops completely for the remainder of the year. This means high earners experience a jump in their net take-home pay mid-year when the cap is hit.
For a worker earning $200,000, they pay Social Security tax on the first $176,100 of wages — a total employee contribution of $10,918.20. The remaining $23,900 of wages is exempt from Social Security tax entirely.
Medicare Tax: No Cap and the Surcharge
Unlike Social Security, Medicare tax applies to all wages with no upper limit. In addition, the Affordable Care Act added the Additional Medicare Tax (AMT) of 0.9% on wages above certain thresholds:
- $200,000 for single filers and married filing separately
- $250,000 for married filing jointly
- $125,000 for married filing separately
Your employer is required to withhold the extra 0.9% once your individual wages from that employer exceed $200,000 in the year — but they don't know your total household income. If you and your spouse together exceed $250,000 but individually neither does, you'll owe the surcharge at tax time rather than through withholding.
Self-Employed Workers Pay More
If you're self-employed, you pay both the employee and employer share of FICA — called the Self-Employment (SE) tax. That means:
- 12.4% for Social Security (on net self-employment earnings up to $176,100)
- 2.9% for Medicare (on all net self-employment earnings)
- 0.9% Additional Medicare Tax if earnings exceed $200,000
The combined SE tax rate is 15.3% on the first $176,100 of net earnings. However, you can deduct half of the SE tax as an above-the-line adjustment on your federal income tax return, which partially offsets the extra burden.
What Do You Get in Return?
FICA taxes are not just taken — they earn you benefits. Your Social Security contributions are tracked throughout your working life to calculate your eventual retirement benefit. The more you earn (up to the wage base), and the longer you work, the higher your monthly Social Security check at retirement.
You need at least 40 "credits" (roughly 10 years of work with sufficient earnings) to be eligible for retirement benefits. Medicare Part A — hospital coverage — is free at age 65 for anyone with 40+ quarters of work history, funded by the Medicare portion of your FICA taxes.