FICA.
In plain English
FICA stands for the Federal Insurance Contributions Act. It funds Social Security and Medicare. As an employee, you pay 6.2% for Social Security (up to an annual wage cap) and 1.45% for Medicare (no cap), for 7.65% total. Your employer pays an identical 7.65% on your behalf. Self-employed people pay both halves themselves, 15.3% total, through self-employment tax.
01Why it matters
FICA is separate from federal income tax and isn't refundable when you file. If you work, FICA gets taken out, period. Knowing this stops the surprise of seeing a paycheck that's much smaller than 'salary divided by 26.' The Social Security half also has a wage cap that resets each year ($184,500 for 2026), so high earners may notice a small bump in take-home pay later in the year when they hit it.
02The math, step by step
On a $60,000 salary, FICA takes about $4,590 from your paycheck across the year ($60,000 × 7.65%). Your employer pays the same amount on top. So the total Social Security and Medicare contribution being made on your behalf is roughly $9,180, even though only the first $4,590 reduces your take-home.
03What this is NOT
Federal income tax depends on your bracket and is reconciled at filing, you can owe more or get a refund. FICA is a flat percentage and is final at withholding; you can't 'get it back' on your return. They're different taxes with different rules, both shown on your paystub.
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice