How to Calculate FICA Deductions

How to Calculate FICA Deductions
Your FICA deductions can make a big difference in your net pay.

Know that Social Security taxes are set at a certain rate depending on the years you earned income. According to the U.S. Code Title 26.3101, any wages earned after 1990 are taxed 6.2 percent for Social Security every pay period. For self-employed individuals, this rate is a much higher at 12.4 percent.

Understand that Medicare is also a set percentage of your check. The standard medicare deduction for wages earned after 1990 is 1.45 percent. Once again, self-employed individuals pay more by having 2.9 percent paid for Medicare.

Add the Social Security total to the medicare total and you come up with your total FICA deduction, which is a 7.65 percent deduction from every paycheck or 15.3 percent for the self-employed.

Realize that wages earned before 1990 were subject to a lower-percentage FICA deduction. From 1937 up to 1989, there was an increasing percentage rate deducted from employee paychecks to pay for FICA taxes (See Resources).

Rest easy knowing that only a certain amount of your income is taxable for FICA. As of April 2010, the maximum amount of FICA-taxable wages was $106,800 (See References).