FICA and Medicare Tax Savings

If you do not use a flexible spending account, your FICA and Medicare Tax Savings is zero.

If you have a flexible spending account, your employer will not withhold FICA and Medicare tax from your pay on the amount contributed to the account.

If your total wages are below the FICA limit ($97,500 in 2007), your FICA tax savings will be 6.2% of the amount contributed to the account. This is usually $310 ($5,000 X 6.2%). When your wages exceed the FICA limit your FICA tax savings will be zero.

No matter how high your wages are, though, you will still benefit from the Medicare tax savings when you contribute to a flexible spending account. This savings will be 1.45% of the amount contributed to the account. This is usually $73 ($5,000 X 1.45%).

We add the FICA tax savings to the Medicare tax savings and display the total.