FICA (Federal Insurance Contributions Act)

FICA is a U.S. federal law that mandates payroll taxes to fund two primary social insurance programs: Social Security and Medicare. Under FICA, both employees and employers contribute a percentage of the employee’s income to these programs. The Social Security portion provides benefits to retirees, disabled individuals, and survivors, while the Medicare portion helps pay for healthcare costs for people aged 65 and older or those with certain disabilities. FICA taxes are automatically withheld from employees’ paychecks, with the employer matching the contribution, making it a shared responsibility.