Social Security and Medicare Taxes

The Federal Insurance Contributions Act (FICA) provides for a federal system of old-age, survivors, disability, and hospital insurance. The old-age, survivors, and disability insurance part is financed by the social security tax. The hospital insurance part is financed by the Medicare tax. Each of these taxes is reported separately.

Generally, you’re required to withhold social security and Medicare taxes from your employees’ wages and pay the employer share of these taxes. Certain types of wages and compensation aren’t subject to social security and Medicare taxes. See section 5 and section 15 for details. Generally, employee wages are subject to social security and Medicare taxes regardless of the employee’s age or whether they are receiving social security benefits. If the employee reported tips, see section 6 .

The $150 test or the $2,500 test for farmwork.

All cash wages that you pay to an employee during the year for farmwork are subject to social security and Medicare taxes and federal income tax withholding if either of the two tests below is met.

You pay cash wages to an employee of $150 or more in a year for farmwork (count all cash wages paid on a time, piecework, or other basis). The $150 test applies separately to each farmworker that you employ. If you employ a family of workers, each member is treated separately. Don’t count wages paid by other employers.

The total that you pay for farmwork (cash and noncash) to all your employees is $2,500 or more during the year.

Exceptions.

Annual cash wages of less than $150 you pay to a seasonal farmworker aren’t subject to social security and Medicare taxes, or federal income tax withholding, even if you pay $2,500 or more to all your farmworkers. However, these wages count toward the $2,500 test for determining whether other farmworkers’ wages are subject to social security and Medicare taxes.

A seasonal farmworker is a worker who:

Is employed in agriculture as a hand-harvest laborer,

Is paid piece rates in an operation that is usually paid on a piece-rate basis in the region of employment,

Commutes daily from their permanent home to the farm, and

Had been employed in agriculture less than 13 weeks in the preceding calendar year.

Wages paid to a child under 18 working on a farm that is a sole proprietorship or a partnership in which each partner is a parent of a child aren’t subject to social security and Medicare taxes. However, these wages count toward the $2,500 test for determining whether other farmworkers’ wages are subject to social security and Medicare taxes.

Deducting the tax.

Deduct the employee tax from each wage payment. If you’re not sure that the wages that you pay to a farmworker during the year will be taxable, you may either deduct the tax when you make the payments or wait until the $2,500 test or the $150 test discussed earlier has been met.

Tax rates and the social security wage base limit.

Social security and Medicare taxes have different rates and only the social security tax has a wage base limit. The wage base limit is the maximum wage subject to the tax for the year. Determine the amount of withholding for social security and Medicare taxes by multiplying each payment by the employee tax rate.

For 2026, the social security tax rate is 6.2% (amount withheld) each for the employer and employee (12.4% total). The social security wage base limit is $184,500. The tax rate for Medicare is 1.45% (amount withheld) each for the employee and employer (2.9% total). There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax.

Additional Medicare Tax withholding.

In addition to withholding Medicare tax at 1.45%, you must withhold a 0.9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. You’re required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Additional Medicare Tax is only imposed on the employee. There is no employer share of Additional Medicare Tax. All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold.

For more information on what wages are subject to Medicare tax, see section 15 . For more information on Additional Medicare Tax, go to IRS.gov/ADMTfaqs .

Successor employer.

When corporate acquisitions meet certain requirements, wages paid by the predecessor are treated as if paid by the successor for purposes of applying the social security wage base limit and for applying the Additional Medicare Tax withholding threshold (that is, $200,000 in a calendar year). You should determine whether or not you should file Schedule D (Form 941), Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations, by reviewing the Instructions for Schedule D (Form 941). See Regulations section 31.3121(a)(1)-1(b) for more information. Also see Revenue Procedure 2004-53, 2004-34 I.R.B. 320, available at IRS.gov/irb/2004-34_IRB#RP-2004-53 .

Example.

Early in 2026, you bought all of the assets of a plumbing business from Adam Black. Julian Gold, who had been employed by Adam and received $2,000 in wages before the date of purchase, continued to work for you. The wages you paid to Julian are subject to social security tax on the first $182,500 ($184,500 minus $2,000). Medicare tax is due on all of the wages you pay Julian during the calendar year. You should include the $2,000 Julian received while employed by Adam in determining whether Julian’s wages exceed the $200,000 threshold for Additional Medicare Tax withholding.

Employee’s portion of taxes paid by employer.

If you pay your employee’s social security and Medicare taxes without deducting them from the employee’s pay, you must include the amount of the payments in the employee’s wages for social security and Medicare taxes. This increase in the employee’s wage payment for your payment of the employee’s social security and Medicare taxes is also subject to employee social security and Medicare taxes. This again increases the amount of the additional taxes that you must pay. For more information, see Revenue Ruling 86-14, 1986-1 C.B. 304, and Pub. 15-A.

Household and agricultural employers.

If you would rather pay a household or agricultural employee’s share of the social security and Medicare taxes without withholding them from the employee’s wages, you may do so. If you don’t withhold the taxes, however, you must still pay them on behalf of the employee. Any employee social security and Medicare taxes that you pay are additional income to the employee. Include it in box 1 of the employee’s Form W-2 (box 7 of Form 499R-2/W-2PR), but don’t count it as social security and Medicare wages and don’t include it in boxes 3 and 5 (boxes 20 and 22 of Form 499R-2/W-2PR). Also, don’t count the additional income as wages for FUTA tax purposes. Different rules apply to employer payments of social security and Medicare taxes for non-household and non-agricultural employees. See section 7 of Pub. 15-A.

Example.

Gavrielle operates a small family fruit farm. Gavrielle employs day laborers in the picking season to allow Gavrielle time to get the crops to market. Gavrielle doesn’t deduct the employees’ share of social security and Medicare taxes from their pay; instead, Gavrielle pays it on their behalf. When Gavrielle prepares the employees’ Forms W-2, Gavrielle adds each employee’s share of social security and Medicare taxes that Gavrielle paid to the employee’s wage income (box 1 of Form W-2), but doesn’t include it in box 3 (social security wages) or box 5 (Medicare wages and tips).

For 2026, Gavrielle paid Dan $1,000 during the year. Gavrielle enters $1,076.50 in box 1 of Dan‘s Form W-2 ($1,000 wages plus $76.50 social security and Medicare taxes paid for Dan). Gavrielle enters $1,000.00 in boxes 3 and 5 of Dan’s Form W-2.

Sick pay payments.

Social security and Medicare taxes apply to most payments of sick pay, including payments made by third parties such as insurance companies. For details on third-party payers of sick pay, see Pub. 15-A.

Motion picture project employers.

All wages paid by a motion picture project employer to a motion picture project worker during a calendar year are subject to a single social security tax wage base limit ($184,500 for 2026) and a single FUTA tax wage base limit ($7,000 for 2026) regardless of the worker’s status as a common-law employee of multiple clients of the motion picture project employer. For more information, including the definition of a “motion picture project employer” and a “motion picture project worker,” see section 3512.

Withholding social security and Medicare taxes on nonresident alien employees.

In general, if you pay wages to nonresident alien employees, you must withhold social security and Medicare taxes as you would for a U.S. citizen or resident alien. However, see Pub. 515 for exceptions to this general rule. One such exception is for foreign agricultural workers on H-2A visas, who are exempt from social security and Medicare taxes. See Compensation paid to H-2A visa holders in section 5.

International social security agreements.

The United States has social security agreements, also known as totalization agreements, with many countries that eliminate dual social security coverage and taxation. Compensation subject to social security and Medicare taxes may be exempt under one of these agreements. You can get more information and a list of agreement countries from the SSA at SSA.gov/international . Also see Pub. 519.

Religious exemption.

An exemption from social security and Medicare taxes is available to members of a recognized religious sect opposed to insurance. This exemption is available only if both the employee and the employer are members of the sect. For more information, see Pub. 517, Social Security and Other Information for Members of the Clergy and Religious Workers.

Foreign persons treated as American employers.

Under section 3121(z), a foreign person who meets both of the following conditions is generally treated as an American employer for purposes of paying FICA taxes on wages paid to an employee who is a U.S. citizen or resident.

The foreign person is a member of a domestically controlled group of entities.

The employee of the foreign person performs services in connection with a contract between the U.S. Government (or an instrumentality of the U.S. Government) and any member of the domestically controlled group of entities. Ownership of more than 50% constitutes control.