Life · Chapter 12 · Characteristics & Funding
FICA Payroll Taxes
Definition
Federal Insurance Contributions Act taxes fund Social Security and Medicare. Employee: 7.65% (6.2% SS + 1.45% Medicare) · Employer: 7.65% (matching) · Self-employed: 15.3% (both halves — 12.4% + 2.9%).
In plain English
You and your boss each chip in 7.65¢ per dollar; work for yourself and you pay both sides.
Exam tip
The SS portion stops at the taxable wage base; the Medicare portion has NO wage cap. Frequently tested breakdown.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
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