What does fica pay for

Your company sends the money, along with its match an additional 7. Planning your finances goes beyond just taxes. Find a local financial advisor today.

Every payday, a portion of your check is withheld by your employer. That money goes to the government in the form of payroll taxes. There are several different types of payroll taxes, including unemployment taxes, income taxes and FICA taxes. The funds are used to pay for both Social Security and Medicare.

Medicare tax rates rose from 0. For the past couple of decades, however, FICA tax rates have remained consistent. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear.

Investopedia does not include all offers available in the marketplace. What Are Medicare Wages? Medicare wages are employee earnings that are subject to a U. What Is a Payroll Tax? A payroll tax is a percentage withheld from an employee's salary and paid to a government to fund public programs.

Learn more about payroll taxes here. What Is the Social Security Act? The Social Security Act established a benefits system for people who are retired, jobless, or have a disability. A payroll tax funds these benefits. Your Complete Guide to Social Security Tax This tax, levied on both employers and employees, funds Social Security and is collected in the form of a payroll tax or a self-employment tax.

What Is Self-Employment Tax? Self-employment tax is the tax that a sole proprietor or freelancer must pay to the federal government to fund Medicare and Social Security. Partner Links. Related Articles. The limit is adjusted annually based on national changes in wage levels.

There is no comparable earnings maximum for Medicare; the 1. Find the answers to the most common Social Security questions such as when to claim, how to maximize your retirement benefits and more. You are leaving AARP. Please return to AARP. You'll start receiving the latest news, benefits, events, and programs related to AARP's mission to empower people to choose how they live as they age. You can also manage your communication preferences by updating your account at anytime.

You will be asked to register or log in. In the next 24 hours, you will receive an email to confirm your subscription to receive emails related to AARP volunteering. Additional Medicare Tax Withholding Rate Additional Medicare Tax applies to an individual's Medicare wages that exceed a threshold amount based on the taxpayer's filing status. Wage Base Limits Only the social security tax has a wage base limit. There's no wage base limit for Medicare tax.

All covered wages are subject to Medicare tax.