Here's What You'll Pay in FICA Tax in 2018

Here's What You'll Pay in FICA Tax in 2018

Anyone who gets a paycheck knows how annoying it is to see taxes get withheld from your hard-earned money. One of the biggest recipients of tax withholding is often identified on your pay stub as FICA. FICA stands for the Federal Insurance Contributions Act, and it governs the amount of money that goes toward funding key programs like Social Security and Medicare. Below, you'll get a fresh look at where your FICA money goes and what you can expect to pay in 2018.

You won't necessarily see any reference to FICA when you get paid. Some companies break out the amount that gets withheld for Social Security separately from Medicare withholding, making the breakdown between the two programs much clearer. But many companies combine the two into the single FICA category, reflecting their obligation under federal law to withhold wages to cover employees' share of those taxes and then send them on to the IRS.

The two parts of the FICA tax work slightly differently from each other. For the Social Security component of FICA, your employer will collect 6.2% of the first $128,700 of your work earnings as withholding. That works out to a maximum amount of $7,979.40 for the year. If you make more than $128,700, then you'll notice that after your employer has collected that maximum amount of tax, withholding for Social Security will stop, and your take-home pay will go up for the remainder of the year.

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Source: Fool.com