Medicare Tax — Payroll Definition
The 1.45% payroll tax that funds federal healthcare for seniors and disabled persons.
The 1.45% payroll tax that funds federal healthcare for seniors and disabled persons.
Medicare tax is a 1.45% tax on ALL wages with no cap (unlike Social Security). High earners pay an additional 0.9% Medicare surtax on wages exceeding $200,000 (single) or $250,000 (married filing jointly), bringing their total Medicare rate to 2.35%. This tax funds Part A of Medicare, which covers hospital insurance for people 65 and older and those with certain disabilities.
Example: $2,000 biweekly gross × 1.45% = $29.00 Medicare tax withheld
Common pay stub code: MED / MEDEE
Medicare Tax Rates in 2026
The employee rate is 1.45% of every dollar of covered wages and the employer matches it with another 1.45%, for a combined 2.9%. There is no wage base limit, so unlike Social Security the deduction never stops during the year. Once an employee's year-to-date wages from one employer exceed $200,000, the employer must also withhold the 0.9% Additional Medicare Tax on the excess, raising that employee's marginal Medicare withholding to 2.35%.
Who Pays the Additional 0.9%
The Additional Medicare Tax is the one piece of FICA the employer does not match — it is withheld from the employee only. Employers apply the $200,000 trigger mechanically, without regard to filing status, but the amount you actually owe is settled on your tax return against the real thresholds: $200,000 for single filers, $250,000 for married filing jointly, and $125,000 for married filing separately. A dual-income couple can therefore owe the surtax at filing time even though neither paycheck crossed $200,000, and a single filer with two jobs can have too much withheld and get it back.
Medicare Tax Is Not a Medicare Premium
The 1.45% payroll tax funds Medicare Part A hospital insurance; it is not a premium and it does not buy you current coverage. Part B and Part D premiums are separate amounts paid by people already enrolled in Medicare, usually deducted from a Social Security benefit rather than from a paycheck. Self-employed workers pay Medicare tax as part of self-employment tax: 2.9% of net earnings with no cap, plus the same 0.9% surtax above the thresholds, with the employer-equivalent half deductible on the income tax return.
Frequently Asked Questions
- What is the Medicare tax rate?
- Employees pay 1.45% of all wages and employers match it with another 1.45%, for a combined 2.9%. Wages above $200,000 carry an extra 0.9% Additional Medicare Tax withheld from the employee only, making the top employee rate 2.35%.
- Is there a wage limit on Medicare tax?
- No. Medicare tax applies to every dollar of covered wages with no cap, which is the main difference from Social Security tax, whose 6.2% stops at $184,500 of wages in 2026. Your Medicare deduction keeps appearing on every stub all year.
- Who pays the Additional Medicare Tax?
- The employee alone. Employers withhold 0.9% on wages over $200,000 for the year and do not match it. The final liability is calculated on Form 8959 with your return using the $200,000 single, $250,000 married-filing-jointly, and $125,000 married-filing-separately thresholds.
- Do self-employed people pay Medicare tax?
- Yes. Self-employed workers pay both halves — 2.9% of net self-employment earnings with no cap — as part of the 15.3% self-employment tax, plus the 0.9% surtax above the filing-status thresholds. The employer-equivalent half of self-employment tax is deductible on the income tax return.