What You Pay Into Medicare Right Now

If you work, you pay 1.45% of your wages into Medicare Part A (hospital insurance), and your employer matches that amount. That 2.9% total comes out of your paycheck automatically. If you're self-employed, you pay the full 2.9% yourself on your net earnings.

There is no income cap on Medicare tax — you pay it on every dollar you earn, no matter how much you make. This is different from Social Security tax, which stops after you hit a certain income level each year.

If you earn over $200,000 as a single filer (or $250,000 married filing jointly), you also pay an additional 0.9% Medicare tax on the income above that threshold. This extra tax started in 2013 and applies to wages, self-employment income, and certain investment income.

Key Takeaways

  • Standard Medicare tax is 1.45% from your paycheck, with your employer paying another 1.45%, for a total of 2.9%.
  • Self-employed people pay the full 2.9% themselves, though they can deduct half of it on their tax return.
  • If you earn over $200,000 (single) or $250,000 (married), you pay an extra 0.9% Medicare tax on income above that amount.
  • Medicare tax has no income cap — you pay it on all your earnings, unlike Social Security tax which stops at a yearly limit.
  • These taxes fund Medicare Part A only; Part B and Part D premiums are separate and charged differently.

How Self-Employment Medicare Tax Works

If you're self-employed, you're responsible for both the employee and employer portions of Medicare tax. That means you pay 2.9% on your net self-employment income (your business profit after expenses). On top of that, if your net earnings exceed $200,000 (single) or $250,000 (married), you pay the additional 0.9%.

The good news: you can deduct half of your self-employment Medicare tax when you file your income tax return. This reduces your taxable income, which lowers your overall tax bill. You calculate this on Schedule SE (Self-Employment Tax) when you file with the IRS.

The Additional Medicare Tax for Higher Earners

The additional 0.9% Medicare tax applies to wages and self-employment income over $200,000 for single filers, $250,000 for married couples filing jointly, and $125,000 for married couples filing separately. Your employer should withhold this automatically if you're a W-2 employee.

If you're self-employed or have multiple jobs, you may need to pay this tax when you file your return. The IRS uses Form 8959 to calculate what you owe. This tax has no cap — you keep paying 0.9% on all income above the threshold, for as long as you earn above it.

What Happens When You Turn 65

Once you turn 65 and enroll in Medicare, you stop paying Medicare tax on your wages if you retire. However, if you continue working past 65, you still pay the standard 1.45% (or 2.9% if self-employed), plus the additional 0.9% if your income is high enough.

Being enrolled in Medicare does not change your tax obligation. The tax funds the program whether you're using it or not. If you delay retirement and keep working, you keep paying into Part A even though you're already covered.

Medicare Premiums Are Separate From Taxes

Medicare taxes and Medicare premiums are two different things. The taxes you paid while working funded Part A (hospital insurance). When you turn 65, you may owe monthly premiums for Part B (doctor visits) and Part D (prescription drugs), depending on your income and whether you have other coverage.

Part A typically has no monthly premium if you or your spouse paid Medicare taxes for at least 10 years. Part B premiums start at a base amount and increase if your income is above certain levels. These premiums are not taxes — they're charges for coverage you choose to enroll in.

How to Check Your Medicare Tax Record

Your Social Security statement shows how much you've paid in Medicare taxes over your lifetime. You can create an account at ssa.gov and view your earnings record, which includes Medicare tax contributions. This record is used to determine whether you may have access to for premium-free Part A when you turn 65.

If you notice errors on your earnings record, you can contact Social Security to request a correction. You'll need documentation like old tax returns or W-2 forms to support the correction. It's worth checking your record a few years before you turn 65, so you have time to fix any mistakes.

Frequently Asked Questions

Do I pay Medicare tax if I'm retired and only getting Social Security?

No. Medicare tax is only withheld from wages and self-employment income. Social Security benefits are not subject to Medicare tax. However, you may owe income tax on part of your Social Security depending on your total income.

What if I work for two employers — do I pay Medicare tax twice?

Yes, you pay 1.45% to each employer. However, if your combined wages exceed the threshold for the additional 0.9% tax, you may overpay it during the year. You can claim a credit for the overpayment when you file your tax return.

Can I opt out of paying Medicare tax?

No. Medicare tax is mandatory for all W-2 employees and self-employed people. There is no religious or personal exemption, unlike some other payroll taxes. The only way to stop paying is to stop earning wages or self-employment income.

Does Medicare tax go into a personal account with my name on it?

No. Medicare taxes go into a general trust fund that pays benefits for all Medicare enrollees. Your tax payments do not create a personal account. Your may be able to access for Part A is based on your work history, not on how much you personally paid in.