Ever wondered why your paycheck is smaller than expected? Chances are FICA taxes are the culprit. Let me break down what actually gets taken out and why.

FICA stands for Federal Insurance Contributions Act—basically the system that funds Social Security and Medicare. These are the two major components that what does fica consist of, and they work together to support retirees, disabled people, and their families. The money collected today goes straight to current beneficiaries, with any excess sitting in a trust fund for future payouts.

Here's the thing most people don't realize: you're not paying this alone. Your employer matches whatever gets withheld from your check. So if you see 7.65% coming out, your employer is kicking in another 7.65%—that's 15.3% total going to the government.

Now, what does fica consist of exactly? Two parts. First, there's the Social Security portion at 6.2% of your earnings, but only up to a certain cap. In 2022, that cap was $147,000. Once you hit that number, no more Social Security taxes come out. Second is Medicare at 1.45%, and this one has no limit—you pay it on every dollar you earn, no matter how much you make.

If you're pulling in serious money, there's another layer. High earners pay an extra 0.9% Medicare tax on anything over $200,000. Your employer starts taking this out once you cross that threshold and keeps going for the rest of the year. No employer match on this one though.

Self-employed? You're basically paying both sides—the full 15.3%. But the tax code throws you a bone: you can deduct half of it on your return.

Want to see what this actually looks like? Say you made $135,000 in 2022. Your Social Security tax would be $8,370 (that's $135,000 × 6.2%), Medicare would be $1,957.50 ($135,000 × 1.45%), totaling $10,327.50. Pretty straightforward when you break it down.

What does fica consist of for someone earning more? The math changes slightly. Hit $147,000? Your Social Security taxes max out there, but Medicare keeps going on the full amount. Earn $250,000? Now you're looking at that extra 0.9% on the $50,000 over the $200,000 threshold, adding another $450 to your tab.

The bottom line: understanding what does fica consist of helps explain a huge chunk of why your net pay is less than your gross. It's not optional, and it's not going away. Your employer handles the withholding based on info you provide on your W-4 form, so make sure that's accurate or you might get surprises at tax time.