What Is the Federal Insurance Contributions Act (FICA)?

By Motley Fool Staff – Updated Jun 8, 2025 at 5:37 AM EST

Key Points

FICA taxes fund Social Security and Medicare, critical for retirees and Medicare recipients.
Employees and employers each pay a 7.65% FICA rate; self-employed pay 15.3%.
FICA's future challenges include potential deficits starting 2035, prompting reform debate.

Whether you work for an employer or yourself, April 15 isn't the only date you pay taxes. U.S. employers and employees have to pay taxes as part of the Federal Insurance Contributions Act (FICA), which funds Social Security and Medicare. Read on to learn more about this tax -- how it's collected, how it's used, and the future of its revenue.

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