Federal Insurance Contributions Act (FICA)

The Federal Insurance Contributions Act (FICA) is a U.S. law that requires employers and employees to contribute to Social Security and Medicare, two vital government programs that provide retirement benefits and health care for seniors. FICA taxes are automatically deducted from workers' paychecks. Employees typically pay 6.2% for Social Security and 1.45% for Medicare, with employers matching these amounts. Self-employed individuals pay both portions, totaling 15.3%. These contributions ensure that individuals can receive financial support in retirement and access health care when needed, reflecting a system designed to support the aging population and those with disabilities.