A more thorough explanation:

Definition: FICA taxes are taxes on wages that fund Social Security and Medicare. These taxes are required by the Federal Insurance Contributions Act. Social Security taxes and Medicare taxes are separate and operate differently. Social Security taxes are 12.4% of an employee’s wages up to a certain amount each year, which is currently $142,800 as of 2021. The tax is split with the employee and employer each paying 6.2%. Medicare taxes are 2.9% on all wages and split 1.45% between employer and employee. However, if a person’s wages exceed $200,000, an extra 0.9% Medicare tax applies for the employee to pay. If someone is self-employed, they must pay both the individual and employer parts of FICA taxes, but they can deduct the employer portions as business expenses.

For example, if an employee earns $50,000 per year, their employer will withhold $3,100 in Social Security taxes and $725 in Medicare taxes from their paycheck. The employee will also pay $3,100 in Social Security taxes and $725 in Medicare taxes, for a total of $7,650 in FICA taxes.

Another example is if a self-employed individual earns $100,000 per year, they will have to pay both the employee and employer portions of FICA taxes. This means they will owe $12,400 in Social Security taxes and $2,900 in Medicare taxes, for a total of $15,300 in FICA taxes.

These examples illustrate how FICA taxes are calculated and how they affect both employees and self-employed individuals.