What Is FICA Withholding?
FICA withholding refers to payroll deductions that allow taxpayers to comply with the provisions of the Federal Insurance Contributions Act. According to the Internal Revenue Service, these payroll deductions include two taxes: Social Security and Medicare.
As of 2014, Social Security tax is withheld at a rate of 12.4 percent. This includes matching contributions of 6.2 percent from both the employer and employee. Medicare tax is deducted at a rate of 2.9 percent. This includes matching contributions of 1.45 percent for both employer and employee. Only wages up to $117,000 per year are subject to Social Security FICA withholding, while taxpayers who are paid more than $200,000 annually are subject to an additional 0.9 percent Medicare tax, according to the IRS.
