What is an Employer FICA Match?

Employer FICA Match

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Employer FICA Match

The term “Employer FICA Match” refers to the obligation employers have to match the amount of Social Security and Medicare taxes (collectively known as FICA taxes) that their employees pay.

FICA stands for the Federal Insurance Contributions Act. Under this U.S. law, both employees and employers are required to contribute to Social Security and Medicare.

The employer’s obligation to match FICA contributions means that the true cost of an employee to an employer is more than just the employee’s gross salary or wages; the employer also needs to consider the additional payroll taxes they must pay.

Example of an Employer FICA Match

Let’s say John is an employee at ABC Corporation and he earns $50,000 per year. John’s responsibility is to pay 7.65% of his income in FICA taxes. That means John would pay $3,825 in FICA taxes ($50,000 * 7.65%).

Now, as an employer, ABC Corporation is required to match John’s FICA contribution. So ABC Corporation would also pay $3,825.

This means that for John’s $50,000 salary, ABC Corporation’s actual cost is $53,825 ($50,000 in salary + $3,825 in employer FICA match).

Keep in mind this is a simplified example and the actual calculations can be more complex.

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