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Glossary · Payroll & compliance

FICA

Federal Social Security and Medicare payroll taxes, paid by both employer and employee.

Also called:Social Security and Medicare taxes

Definition

FICA is the Federal Insurance Contributions Act, which funds Social Security and Medicare. Both the employer and the employee pay: 6.2% each for Social Security, up to an annual wage base, and 1.45% each for Medicare, for a combined employer share of 7.65% on most wages. Higher earners pay an additional Medicare tax on the employee side. For W-2 temp workers, the staffing agency as employer of record pays the employer share, which is one of the costs built into the bill rate.

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This definition is general information, not legal, tax or financial advice. Rules vary by state and change over time.

Payroll & compliance

More terms on this topic.

10DLCThe registration system U.S. carriers use for business text messages sent from ordinary 10-digit phone numbers.
ABC testA strict three-part test some states use to decide whether a worker is an employee or a contractor.
Adverse actionA decision not to hire, place or keep someone based in whole or part on a background check report.
Background checkA report on a candidate's history, such as criminal records or driving record, used in hiring decisions.
Co-employmentAn arrangement where two companies share employer duties for the same worker on purpose, as in staffing or a PEO.
E-VerifyA federal online system that checks Form I-9 information against government records.
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