Q:

What does FICA mean on my pay stub?

A:

Quick Answer

The Federal Insurance Contributions Act is a type of income tax that contributes to Social Security and Medicare in the United States. As of 2015, FICA stipulates that 12.4 percent of earned income is paid into Social Security, and an additional 2.9 percent is paid into Medicare.

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Full Answer

Employees only pay 6.2 percent of the 12.4 percent paid into Social Security and 1.45 percent paid into Medicare. The employer pays the remaining 7.65 percent. Unlike the earned income paid into Social Security, which is currently capped at $118,500, there are no earned income limits on Medicare taxes. This means if an employee's salary is greater than $118,500, he still owes the full 1.45 percent Medicare tax on his total earned income.

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