Easy swaps to make your vacation more sustainable
Reduce waste this holiday season with smart ways to reuse and choose sustainable decorations and gifts.
Confused about the money that’s taken out of your paycheck each week? Wondering what Social Security and Medicare taxes have to do with you? Here’s what you need to know about U.S. federal taxes.
What is FICA?
FICA (Federal Insurance Contributions Act) is a federal payroll tax. A total of 7.65% of gross wages goes toward federal taxes. Your employer will match the following percentages:
- 6.2% to social security
- 1.45% to Medicare
Individuals with earned income over $200,000 ($250,000 for married couples filing jointly) pay an additional 0.9% Medicare tax. These taxes from your paycheck fund the Social Security and Medicare programs that many Americans rely on, including retirement benefits, disability benefits, survivor benefits, and child benefits.
Is FICA the same as Social Security?
No, FICA taxes and Social Security taxes are not the same, but they are related. Social Security taxes are 6.2% withheld from your monthly paycheck (up to the 2025 tax cap of $184,500), and FICA is combination Social Security and Medicare taxes.
Who is exempt from FICA?
Certain wages are exempt from FICA taxes. For example, FICA taxes do not apply to services performed by employed students. An organization is considered a “school, college, or university” if its function and relationship with students and employers is primarily educational.
According to the IRS, nonresidents are generally responsible for paying Social Security and Medicare taxes. However, the following groups of people are exempt from FICA taxes:
- A visa holder: Employees who are paid a salary in their official capacity as foreign civil servants.
- D visa holder: Crew members of ships or aircraft where the employer or ship is foreign or the work is performed outside the United States.
- F visa, J visa, M visa, Q visa holders: Employees who perform work in the United States that is authorized by U.S. Citizenship and Immigration Services, such as on-campus student employment, certain off-campus student employment, on-campus employment, or apprenticeship employment.
- G visa holders: Employees of an international organization who receive a salary in their official capacity
- hole: Nonimmigrant residents of the Philippines engaged in services on Guam or nonimmigrants engaged in temporary agricultural labor
Other paid wages that are exempt from Social Security and Medicare taxes include:
- a duly ordained, commissioned, or licensed pastor of a church
- Children under the age of 18 who are employed by their parents
- Student nurses who are paid a salary under certain conditions
Self-employed people are not exempt from Social Security or Medicare taxes, but because they are not matched with an employer, they are subject to a different, higher tax rate known as the “self-employment tax.” The total tax rate is 15.3% and is divided into two parts:
- 12.4% to social security
- 2.9% to Medicare
What happens if FICA is mistakenly deducted from my paycheck?
If Social Security taxes were mistakenly withheld from your exempt paycheck, you may be eligible for a refund. You must receive a full refund from your employer. If not, you can file a claim with the IRS.
