FICA Breakdown: Social Security and Medicare Explained
FICA stands for Federal Insurance Contributions Act. Every W-2 employee pays two FICA taxes: Social Security at 6.2% and Medicare at 1.45%. Your employer matches both rates, making the combined FICA burden 15.3% of your wages. These taxes fund retirement benefits and healthcare for seniors—they are not optional and cannot be reduced by deductions or credits.
Social Security tax applies only to the first $176,100 of wages in 2025. Earn above that and the 6.2% stops. Medicare has no wage cap—every dollar is taxed at 1.45%. If you earn above $200,000 (single) or $250,000 (married filing jointly), you pay an additional 0.9% Medicare surtax on wages above the threshold. Your employer does not match the additional Medicare tax.
Self-employed workers pay both halves: 12.4% Social Security plus 2.9% Medicare, totaling 15.3%. They can deduct half of self-employment tax on their income tax return, but the cash outflow is still double what a W-2 employee sees on their pay stub.
2025 Federal Income Tax Brackets (Single Filers)
| Tax Rate | Taxable Income Range | Tax on $75K Salary* |
|---|---|---|
| 10% | $0 – $11,925 | $1,192.50 |
| 12% | $11,925 – $48,475 | $4,386.00 |
| 22% | $48,475 – $103,350 | $2,255.50 |
| 24% | $103,350 – $197,300 | $0 |
| 32% | $197,300 – $250,525 | $0 |
| 35% | $250,525 – $626,350 | $0 |
| 37% | Over $626,350 | $0 |
*Assumes single filer, $15,700 standard deduction, no pre-tax deductions. Taxable income = $59,300. Total federal tax = $7,834.00. Source: IRS Revenue Procedure 2024-40.
Employer vs. Employee: Who Pays What
Employees see half the picture. You pay 6.2% Social Security and 1.45% Medicare out of your paycheck. Your employer pays the exact same amounts on your behalf—plus Federal Unemployment Tax (FUTA) at 0.6% on the first $7,000 of your wages. On a $75,000 salary, your employer's total payroll tax cost is roughly $6,180: $4,650 for Social Security, $1,087.50 for Medicare, and $42 for FUTA.
This means an employee who costs $75,000 in salary actually costs the company about $81,180 when you add employer-side payroll taxes. Benefits like health insurance, 401(k) matching, and workers' compensation push the true cost even higher—typically 1.25x to 1.4x the base salary. Use the employer view toggle in the calculator above to see the full picture.
How W-4 Adjustments Affect Your Paycheck
Your W-4 form tells your employer how much federal income tax to withhold. Filing status is the biggest lever: a single filer on $75K sees about $7,834 in federal tax, while married filing jointly on the same salary pays roughly $4,534 because of wider tax brackets and a larger standard deduction ($31,400 vs. $15,700).
Pre-tax deductions—401(k) contributions, HSA contributions, health insurance premiums—reduce your taxable income before withholding is calculated. Contributing $6,000 to a traditional 401(k) on a $75K salary drops your taxable income by $6,000, saving roughly $1,320 in federal tax (22% bracket) plus $459 in FICA. That's $1,779 in annual tax savings from a single adjustment.
If you consistently owe money or get large refunds at tax time, your W-4 needs updating. The IRS Tax Withholding Estimator at irs.gov can help you dial in the right amount. The goal is breaking even—not giving the government an interest-free loan and not owing a penalty.
To see how your marginal and effective rates compare across brackets, use the tax bracket calculator. For a full paycheck breakdown including state taxes and benefits, try the paycheck calculator. If you earn 1099 income, the freelance tax calculator shows both halves of self-employment tax.