What is FICA?
The Federal Insurance Contributions Act (FICA) funds Social Security retirement and disability benefits and Medicare health insurance through deductions from W-2 paychecks.
The Social Security Wage Limit ($184,500)
For 2026, the Social Security Administration lists a taxable wage limit of $184,500. Once Social Security wages paid by one employer reach $184,500 for 2026, that employer stops withholding the 6.2% employee Social Security tax for the rest of the year. Medicare continues, and excess Social Security withholding caused by multiple employers is reconciled separately on the employee’s return.
Medicare and the ACA Additional Medicare Tax
Unlike Social Security, standard Medicare tax of 1.45% applies to 100% of earned wages, with no wage cap. Under the Affordable Care Act (ACA), an Additional Medicare Tax of 0.9% applies to earnings above the thresholds ($200,000 for Single filers or $250,000 for Married couples filing jointly).