FICA Tax Laws

FICA stands for the Federal Insurance Contributions Act, which mandates a payroll tax to fund Social Security and Medicare. This tax is split evenly between employees and employers, with each contributing 6.2% for Social Security on earnings up to a certain limit, and 1.45% for Medicare on all earnings. Self-employed individuals pay both portions. FICA taxes are essential for providing benefits to retirees, disabled individuals, and healthcare services for seniors. Understanding FICA helps individuals appreciate how their contributions support these vital social programs.