What Are FICA Taxes?

Answers to your questions about the news.
March 27 2001 1:38 PM

What Are FICA Taxes?

You've probably noticed on your pay stub that a big chunk of money goes to FICA. What is FICA, and is George Bush planning to cut this tax?

Advertisement

FICA is an acronym for the Federal Insurance Contributions Act, which is the name of the legislation that requires employers to withhold taxes from your paycheck to cover certain government programs. The FICA withholdings are known as "payroll" taxes, and don't expect to see the amount diminish if George Bush's tax cut proposal passes. His plan is about federal income taxes, not payroll taxes. What comes under FICA are the federal taxes on Social Security, disability, and Medicare. Unlike federal income taxes, which vary depending on how much money you make and how many tax credits or deductions you can claim, the FICA taxes are set at a fixed rate for every employee. For the 2000 tax year, the amount of money an employee paid for Social Security was 6.2 percent of wages up to $76,200 of income. That is, any money you make above the $76,200 ceiling is not subject to further Social Security tax. This Social Security component (also known as OASDI, an acronym for Old-Age, Survivors, and Disability Insurance) is made up of two things. The bulk is for retirement payouts and survivors' benefits, which claim 5.3 percent of your paycheck; the other 0.9 percent goes to a disability fund. Also under FICA is Medicare, sometimes referred to as HI, for hospital insurance. That takes 1.45 percent of all of your paycheck--there is no ceiling on it. Employers also pay these payroll taxes--for each person hired, they must match the 6.2 percent Social Security tax and the 1.45 percent Medicare tax. For the self-employed, that means the pleasure of being your own boss is diminished by the pain of having to pay your boss's matching share of the tax. Since at the lower end of the wage scale many workers pay nothing or very little in income taxes (as this Readme explains), payroll taxes make up the bulk of their tax burden. 

Explainer thanks Pete Sepp of the National Taxpayers Union  and reader Kimberley Piros for suggesting the question.

TODAY IN SLATE

Doublex

Crying Rape

False rape accusations exist, and they are a serious problem.

Scotland Is Just the Beginning. Expect More Political Earthquakes in Europe.

I Bought the Huge iPhone. I’m Already Thinking of Returning It.

The Music Industry Is Ignoring Some of the Best Black Women Singing R&B

How Will You Carry Around Your Huge New iPhone? Apple Pants!

Medical Examiner

The Most Terrifying Thing About Ebola 

The disease threatens humanity by preying on humanity.

Television

The Other Huxtable Effect

Thirty years ago, The Cosby Show gave us one of TV’s great feminists.

Lifetime Didn’t Find the Steubenville Rape Case Dramatic Enough. So They Added a Little Self-Immolation.

No, New York Times, Shonda Rhimes Is Not an “Angry Black Woman” 

Brow Beat
Sept. 19 2014 1:39 PM Shonda Rhimes Is Not an “Angry Black Woman,” New York Times. Neither Are Her Characters.
Behold
Sept. 19 2014 1:11 PM An Up-Close Look at the U.S.–Mexico Border
  News & Politics
Politics
Sept. 19 2014 6:22 PM Blacks Don’t Have a Corporal Punishment Problem Americans do. But when blacks exhibit the same behaviors as others, it becomes part of a greater black pathology. 
  Business
Moneybox
Sept. 19 2014 6:35 PM Pabst Blue Ribbon is Being Sold to the Russians, Was So Over Anyway
  Life
Inside Higher Ed
Sept. 19 2014 1:34 PM Empty Seats, Fewer Donors? College football isn’t attracting the audience it used to.
  Double X
The XX Factor
Sept. 19 2014 4:58 PM Steubenville Gets the Lifetime Treatment (And a Cheerleader Erupts Into Flames)
  Slate Plus
Slate Picks
Sept. 19 2014 12:00 PM What Happened at Slate This Week? The Slatest editor tells us to read well-informed skepticism, media criticism, and more.
  Arts
Brow Beat
Sept. 19 2014 4:48 PM You Should Be Listening to Sbtrkt
  Technology
Future Tense
Sept. 19 2014 6:31 PM The One Big Problem With the Enormous New iPhone
  Health & Science
Medical Examiner
Sept. 19 2014 5:09 PM Did America Get Fat by Drinking Diet Soda?   A high-profile study points the finger at artificial sweeteners.
  Sports
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.