2025 FICA Tax Rates & Limits
$176,100
Social Security Wage Base
6.2% + 6.2%
SS Tax (Employee + Employer)
1.45% + 1.45%
Medicare (Employee + Employer)
0.9%
Additional Medicare (>$200k)
How S-Corp FICA Savings Work
As an S-Corp owner, you split your business income between W-2 wages (subject to FICA) and distributions (not subject to FICA). The key is finding the "reasonable compensation" sweet spot:
- Too low: IRS audit risk - unreasonable compensation
- Too high: Unnecessary FICA taxes paid
- Just right: Defensible salary + maximum distribution savings
Business Income
$
Your S-Corp's net profit before deducting your W-2 salary
$
Your documented reasonable W-2 salary amount
Affects Additional Medicare Tax threshold
2025 FICA Tax Rates
| Tax Component | Rate |
|---|---|
| Social Security (Employee) | 6.20% |
| Social Security (Employer) | 6.20% |
| Combined SS (up to $176,100) | 12.40% |
| Medicare (Employee) | 1.45% |
| Medicare (Employer) | 1.45% |
| Combined Medicare (no cap) | 2.90% |
| Additional Medicare (>$200k/$250k) | 0.90% |
| Maximum Combined FICA | 15.30%+ |
Your FICA Tax Savings
If 100% W-2
$0
Total FICA on full income
With S-Corp Split
$0
FICA on reasonable comp only
Annual FICA Savings
$0
0% savings
❌ Scenario A: 100% W-2 (No S-Corp Benefit)
| W-2 Wages | $0 |
| Social Security Tax (12.4%) | $0 |
| Medicare Tax (2.9%) | $0 |
| Additional Medicare (0.9%) | $0 |
| Total FICA | $0 |
✓ Scenario B: Optimized S-Corp Split
| W-2 Reasonable Comp | $0 |
| Social Security Tax (12.4%) | $0 |
| Medicare Tax (2.9%) | $0 |
| Additional Medicare (0.9%) | $0 |
| Distributions (No FICA) | $0 |
| Total FICA | $0 |
Key Insights
Documentation Reminder
Always maintain a reasonable compensation study documenting comparable salaries in your industry, geographic area, and role. This is your primary audit defense under IRC §3121.