Personal Finance & Estate › Social Security › Social Security (OASDI)
FICA & self-employment tax (Social Security & Medicare)
Wage base $184,500 (2026)· Tax rule
Law or rule (2026)Set by statute, regulation or the agency; numbers change yearly.
The payroll tax that funds Social Security and Medicare: 7.65% each from worker and employer, or 15.3% for the self-employed.
See it on the Personal Finance & Estate map →How it works
Employees pay 6.2% for Social Security on wages up to $184,500 in 2026, plus 1.45% for Medicare on all wages; employers match both. Above $200,000 of wages ($250,000 for married couples) an extra 0.9% Medicare tax applies, with no employer match. Self-employed people pay both halves, 15.3%, on 92.35% of net earnings, then deduct half on their income tax. Rents, interest, dividends and capital gains are not hit, though a separate 3.8% investment-income tax can apply.
Why it matters for you
These taxes earn your Social Security credits and Medicare eligibility, and they supply about nine of every ten dollars the Social Security trust funds take in.
Rules, limits and sources (2026)
FICA dates to the 1935 Social Security Act, with collections from 1937; self-employment tax began in 1951. SSA and the IRS publish the rates and wage base each year.
Watch out for
Raising or removing the $184,500 wage cap is a leading proposal to fix the trust fund, and among the most debated.
Connections (3)
▸FICA & self-employment tax (Social Security & Medicare) funds Social Security (OASDI)Law or rule (2026)
How they connect
The 12.4% Social Security share of FICA and self-employment tax, on earnings up to $184,500 in 2026, supplies about nine-tenths of the program's income. Paying it also earns the credits that make you eligible. Today's taxes mostly pay today's retirees.
When it applies
Collections began in 1937 at 1% each from worker and employer on the first $3,000 of wages; later laws, mainly in 1977 and 1983, raised the rate and wage base.
The rule
Each Trustees Report itemizes the year's income by source: payroll taxes, income taxes on benefits and interest on reserves.
Watch out for
Whether to raise the rate, lift the wage cap, or add other revenue for Social Security is the central funding debate.
▸FICA & self-employment tax (Social Security & Medicare) funds Medicare Part A (hospital)Law or rule (2026)
How they connect
Part A runs mainly on the Medicare payroll tax: 1.45% each from employee and employer on all wages, or 2.9% for the self-employed, with no wage cap, plus 0.9% on wages above $200,000 single or $250,000 joint. Ten years of paying it earns premium-free Part A. The 3.8% investment-income tax goes to the general fund instead.
When it applies
The hospital insurance tax began in 1966 at 0.35% each; the wage cap was removed in 1994 and the 0.9% surtax added in 2013.
The rule
IRC Sec. 3101(b) and 1401(b); Medicare Trustees Reports show payroll taxes supply most Hospital Insurance trust fund income.
Watch out for
Proposals to steer the 3.8% net investment income tax into the Part A trust fund have been made but not enacted.
▸LLC & partnership taxation (Schedule K-1) exposes active income, but not rents, to FICA & self-employment tax (Social Security & Medicare)Law or rule (2026)
How they connect
Partners and many LLC members owe 15.3% self-employment tax on their share of active business income and guaranteed payments, such as fees for managing others' property. Rents from real estate, interest, dividends and capital gains are excluded, though the 3.8% investment-income tax may apply.
When it applies
Tax code section 1402 defines self-employment income; the limited-partner exclusion dates to 1977, and Congress froze proposed IRS rules for LLC members in 1997.
The rule
IRS instructions for Schedule K-1 (box 14) and Schedule SE; Tax Court cases have tested the limited-partner rules.
Watch out for
When an LLC member counts as a 'limited partner' is contested in the courts; how your entities' income is classified is a question for your CPA.