FICA Explained: The 7.65 Percent Taken From Every Paycheck Before You See a Dime

Every W-2 paycheck has two mystery lines that together remove 7.65% from every dollar you earn before the money ever touches your account. This episode breaks down what FICA is, where each fraction goes, why Social Security has a wage cap at $184,500 in 2026 while Medicare has no cap at all, what the Additional Medicare Tax means for higher earners, and why self-employed workers pay the full 15.3%. Covers the OASI, DI, and HI trust funds. Verify current rates at IRS.gov or with a CPA or Enrolled Agent. Watch the next video in the playlist for the full withholding system breakdown. ▶ Watch next: How Tax Withholding Actually Works (and Why That Big Refund Is Not Free Money) https://www.youtube.com/watch?v=_e74s6jHxX0 📺 Full playlist: Taxes (US - 2026) https://www.youtube.com/playlist?list=PLlIAFxS29648tZvdlQoVzEf8eMsYpNdZw Chapters: 0:00 The Two Lines That Quietly Empty Your Paycheck Before You See It 2:26 The Social Security Wage Cap and the Medicare Rule With No Cap 4:32 The Additional Medicare Tax: What High Earners Pay on Top 6:50 Self-Employment Tax: When You Pay Both Sides of the Deal 9:22 The Trust Funds Behind FICA: Where the Money Actually Lives 11:41 Half Deductible and the Strategy Behind the SE Tax 14:00 Quiz Time 16:14 Key Takeaways #Taxes #TaxPlanning #TaxStrategy --- Disclosure The avatars and voices in this video are AI-generated. All content -- research, scripts, lesson design, and the custom video engine -- is created by a CISSP, CISM, and PMP certified professional with a Master's in Project Management, a B.S. in Information Technology, and a Doctorate in Business Administration in progress. This channel exists to make learning accessible and straightforward. This channel is not affiliated with, endorsed by, or sponsored by the Internal Revenue Service (IRS), any state department of revenue, or any tax preparation company. All information is sourced from publicly available IRS and state tax authority resources and is provided for educational purposes only. Tax brackets, deduction amounts, credit eligibility, and filing rules change annually — always verify with IRS.gov or a qualified Certified Public Accountant (CPA), Enrolled Agent (EA), or tax attorney before making tax decisions. IRS: 1-800-829-1040 | IRS.gov | Volunteer Income Tax Assistance (VITA) locator: irs.treasury.gov/freetaxprep