Tax Information
Federal Insurance Contributions Act (FICA) Withholding for Social Security and Medicare

As employers, state agencies and institutions of higher education are required by the Federal Insurance Contributions Act (FICA) to deduct employment taxes from the wages of a state officer or employee. Wages are defined as all remuneration for employment, including the cash value of all remuneration (including benefits) paid in any medium other than cash. Please note that there are many exceptions to this definition that are beyond the scope of this guide. Employers must withhold a set percentage of an employee’s salary each pay period. FICA requires that the employer match the employee’s amount and contribute the money to a government account known as the Social Security Trust Fund. This fund provides retirement income, as well as disability insurance, Medicare and benefits for survivors.

The Social Security tax rate is 6.2 percent and the hospital insurance (Medicare) tax rate is 1.45 percent for a total FICA tax rate of 7.65 percent. The combined employee-employer FICA tax rate is 15.3 percent.

Social Security tax is applied only up to a certain wage base, $168,600 for 2024. Wage limits for the calendar year can be found at the U.S. Social Security Administration. There is no wage limit for the Medicare deduction.

Since 2013, wages paid in excess of $200,000 are subject to an extra 0.9 percent Medicare tax that is only withheld from employees’ wages. Employers do not pay the extra tax.

Sources

Internal Revenue Code, Sections 3101, 3102(a), 3121(a); 42 United States Code, Section 430; Treasury Regulations, Section 31.3102-1(a); Cost-of-Living Increase and Other Determinations for 2024, 88 Federal Register 72803; Texas Government Code, Sections 606.003, 606.063-606.064, 606.066-606.069, 659.002(d).