What FICA is and how it is split
FICA stands for the Federal Insurance Contributions Act, and it funds two programs. Social Security (technically OASDI) takes 6.2% of wages from the employee and another 6.2% from the employer, but only up to an annual ceiling called the wage base, which is $176,100 for 2025. Once your year-to-date wages pass that figure, Social Security tax stops until January. Medicare takes 1.45% from each side on every dollar of wages with no ceiling at all. Together an ordinary paycheck loses 7.65% to FICA, and your employer quietly pays another 7.65%.
A third piece applies to higher earners. The Additional Medicare tax adds 0.9% on wages above $200,000 for single and head-of-household filers and above $250,000 for married couples filing jointly. It is employee-only, so the employer does not match it, and payroll systems start withholding it once a single employer has paid you $200,000 regardless of your filing status, which is why some couples owe or get back a small amount at filing time.
A worked example
Take a salaried employee earning $75,000 a year. Social Security is 6.2% of $75,000, or $4,650.00, because the whole salary sits under the wage base. Medicare is 1.45% of $75,000, or $1,087.50. The employee share is $5,737.50 for the year, which is $220.67 out of each of 26 biweekly paychecks, and the employer contributes the same $5,737.50. Now push the salary to $250,000: Social Security is capped at 6.2% of $176,100, or $10,918.20, Medicare is 1.45% of $250,000, or $3,625.00, and the Additional Medicare tax adds 0.9% of the $50,000 above $200,000, or $450.00, for an employee total of $14,993.20.
Self-employment tax
If you work for yourself, there is no employer to split the bill, so you pay both halves as self-employment tax: 12.4% for Social Security up to the same $176,100 base and 2.9% for Medicare with no cap, a combined 15.3%. Schedule SE first multiplies your net profit by 92.35%, which mirrors the fact that an employee's FICA is figured on wages after the employer's share has been taken out of the pot. On $75,000 of net profit, net earnings are $69,262.50 and the self-employment tax is $10,597.16.
You then deduct half of that amount, $5,298.58, as an adjustment to income on Form 1040. The deduction lowers your income tax but not the self-employment tax itself, and it does not apply to the 0.9% Additional Medicare piece. Because nobody withholds this for you, most self-employed people send quarterly estimated payments in April, June, September and January covering both self-employment tax and income tax.