How Do I Calculate the Amount of FICA Tax Withholding?

And What Happens If You Withhold Too Much

calculate tax
Guido Mieth/Moment/Getty Images

Calculating FICA Tax Withholding From Employee Paychecks

Every person working in the U.S. as an employee must have FICA taxes withheld from every paycheck. This article provides a step-by-step guide to doing the withholding of FICA taxes. 

FICA taxes are taxes for Social Security and Medicare. The FICA tax is shared by employees and employers, so one-half of the tax is deducted from employee paychecks each payday.

The other half, an amount equal to the amount deducted from employee paychecks, must be paid by you as an employer.

Do the calculation 

Information Needed for FICA Tax Withholding Calculation

To calculate FICA taxes from an employee's paycheck, you will need to know:

  • The amount of gross pay for the employee for that pay period
  • The total year-to-date gross pay for that employee
  • The Social Security and Medicare withholding rates for that year (see below)
  • Any amounts deducted from that employee's pay for pre-tax retirement plans

In addition, you will need to know, for each year: 

The Social Security Maximum. This is the maximum wages or salary amount for Social Security for that year. Each year the Social Security Administration publishes a maximum Social Security amount; no Social Security withholding is taken from employee pay above this amount (but the employer is still required to make these payments.

 Go to "Social Security Maximum" to find this year's maximum withholding amount. And,

The Additional Medicare Tax. The pay amount at which additional Medicare taxes must be withheld from higher paid employees. The pay amount is different depending on the individual's tax status (married, single, etc.) At the specified level for the year, an additional 0.9 percent must be withheld from the employee's pay for the remainder of the year.

The FICA Tax Withholding Rates: 

  • The Social Security (OASDI) withholding rate is gross pay times 6.2 percent up to the maximum pay level for that year
  • The Medicare withholding rate is gross pay times 1.45 percent, with a possible additional 0.9 percent for highly-paid employees. 
  • For a total of 7.65 percent withheld, based on the employee's gross pay. 

Doing the Calculations for FICA Withholding for a Payroll 

Begin with Gross Pay. To begin, you will need the employee's gross pay for that pay period.

  • The gross pay for a salaried employee is the amount of salary for that period (usually, the employee's annual salary divided by the number of pay periods).
  • The gross pay for an hourly employee is the total calculated pay, multiplying hours times hourly rate and including hours for overtime and the overtime rate. For example, if an employee worked 44 hours during a week at $12.50, you would multiply 40 times $12.50 and 4 times the overtime rate. 

Determine the amount of employee wages/salaries that are subject to FICA taxes. Eliminate any amounts that are not subject to these taxes. 

Don't subtract any pre-tax deductions or pre-tax retirement plan contributions, such as those for a 401(k) or other qualified retirement plan.

These deductions and contributions are subject to FICA taxes, but not federal income tax. 

For higher-paid employees, double check that the employee's year-to-date wages/salaries are not over the Social Security maximum wages for the year. Stop withholding Social Security for the year at the point where the employee's total pay (including overtime and bonuses) reaches the maximum for that year. 

Calculate the Social Security deduction, multiplying the current Social Security tax rate by the amount of gross wages subject to Social Security.

Calculate the Medicare deduction, multiplying the current Medicare tax rate by the amount of gross wages subject to Medicare. Check to see if the employee has reached the additional Medicare tax level and increase deductions from the employee's pay. 

Employer's Portion of FICA Taxes

After you have completed the FICA tax calculations for all employees, you must set aside an amount equal to the total for your employer portion of the FICA taxes.

What If I Deducted too Much Social Security Tax?

If you deducted too much tax from an employee's pay, either for Social Security or for Medicare tax, you may have several things to fix:

  • Refund the employee. You will need to pay the employee back for the excess deduction amount. You can give this amount back to the employee in a paycheck or as a separate check. Be sure you don't deduct Social Security from this check!
  • File a Corrected 941. If the mistake was included in a Form 941 (quarterly payroll) report, you will need to file a correction form (941-X) to receive a refund.
  • Change the employee's payroll record. Deduct the over-payment of Social Security taxes from the employee's payroll tax record. The W-2 Form for an employee who earns more than $106,800 should show (1) the total amount of pay earned for the year and (2) the total Social Security wages as $106,800. The Medicare wages will be the same as the total amount of pay.

Reporting FICA Tax Withholding

You must report FICA tax withholding: 

Back to Calculating Employee Paycheck Deductions

Back to FICA Taxes Explained