FICA stands for the Federal Insurance Contributions Act. This law outlines that taxes should be withheld from paychecks and used to fund the Social Security and Medicare programs.

Both employees and employers are affected by the FICA tax. Here's a look at how the FICA tax is calculated.

The law that created the FICA tax was passed in 1935. The funds are used to provide a retirement savings and insurance program for working Americans.

Ben Dobler, founder of Cincinnati's Stewardship Financial Counsel, says FICA taxes fund Social Security. FICA taxes also fund Medicare.

Employers and employees pay the same FICA taxes. Social Security and Medicare are FICA taxes. 2022 Social Security and Medicare tax rates are 6.2% and 1.45% of wages.

FICA taxes total 7.65%. Self-employed people must pay both the employee and employer portion of FICA taxes (15.3%).

2022 Social Security wage base: $147,000. You'll pay 6.2% of earnings up to $147,000 in Social Security tax. Above that limit, Social Security isn't taxed.

Payments that are not subject to FICA taxes include: -Parents who hire minors. -Employer 401(k) contributions. -Students working for a school, college, or university. -Some church and church-controlled pay. -Some government salaries.