Who is exempt from paying the FICA tax in the United States?

Personal Finance November 26, 2013 Print Friendly and PDF

FICA stands for Federal Insurance Contributions Act. FICA consists of two separate payroll taxes: Social Security (6.2% of pay) and Medicare (1.45% of pay), for a total of 7.65%. This is paid equally by workers and their employers, for a total of 15.3% of pay (7.65% x 2).

In the case of self-employed workers and independent contractors, they pay the full 15.3% tax as self-employment taxes on Schedule SE that is filed with their tax return. Almost all employed and self-employed workers are covered by Social Security and are expected to pay FICA tax or self-employment taxes.

The major exceptions are most civilian federal government employees hired before 1984 (they are covered by and pay the 1.45% tax for Medicare but not for Social Security retirement benefits) and about 25% of state and local government employees with a pension plan. There are also other limited exceptions that apply (e.g., some on-campus college student employment).

For additional information about FICA tax exemptions, check with your employer or visit www.socialsecurity.gov.

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This work is supported by the USDA National Institute of Food and Agriculture, New Technologies for Ag Extension project.