FICA (Federal Insurance Contribution Act) Definition
FICA stands for Federal Insurance Contribution Act, a tax that provides for the federal system of Old Age, Survivors, Disability Insurance, and Hospital Insurance. The first three are funded by the Social Security system, while Hospital Insurance is funded by a Medicare tax.
FICA Extended Definition
FICA tax is a mandatory tax that employers and employees pay for. The FICA tax is 7.65% of an employee’s wages. Employers must withhold 7.65% and pay a matching 7.65%.
Of each 7.65%, 6.2% goes toward Social Security tax, and 1.45% goes toward Medicare tax. There’s a Social Security wage base and additional Medicare tax employers need to know about.
Last Updated By
Rachel Blakely-Gray | Apr 27, 2023