How much comes out of your paycheck for Medicare and Social Security
If you are still working, your employer takes 6.2% of your gross pay for Social Security and 1.45% for Medicare Part A (hospital insurance). That is a combined 7.65% before taxes. Your employer matches that amount, so the total cost to your employer is 15.3%, but you only see half of it on your pay stub.
If you are self-employed, you pay both the employee and employer share — 12.4% for Social Security and 2.9% for Medicare — for a total of 15.3%. You can deduct half of this on your tax return, but you still write the full check.
These rates have been the same since 1985 for Social Security and 1966 for Medicare. Congress would have to change the law to alter them, which happens rarely.
Key Takeaways
- Employees pay 6.2% for Social Security and 1.45% for Medicare; self-employed workers pay double because they cover both sides.
- Social Security tax stops once you reach the annual wage cap, which changes each year; Medicare tax does not have a cap.
- Once you turn 65 and enroll in Medicare, you no longer pay the 1.45% Medicare tax on wages, but you do pay premiums for coverage.
- Your Medicare premiums in retirement depend on your income and which parts of Medicare you choose, and they are separate from the payroll tax you paid while working.
The Social Security wage cap and why it matters
Social Security tax only applies to income up to a certain amount each year. In 2024, that cap is $168,600. If you earn $200,000, you pay Social Security tax on only the first $168,600. Once you hit that cap, no more Social Security tax comes out of your paycheck for the rest of the year.
Medicare tax has no cap. If you earn $500,000, you pay the 1.45% Medicare tax on all $500,000. High earners also pay an additional 0.9% Medicare tax on income above $200,000 (or $250,000 if married filing jointly), which started in 2013.
The Social Security wage cap changes every year because it is tied to national wage growth. The cap was $160,200 in 2023 and $168,600 in 2024. You can find the current year's cap on the Social Security Administration website.
What you pay for Medicare once you are retired
Once you turn 65 and enroll in Medicare, you stop paying the 1.45% payroll tax on your wages — but only if you stop working. If you keep working past 65, the tax continues until you retire.
In retirement, you pay Medicare premiums instead. These are monthly charges for the different parts of Medicare. Medicare Part A (hospital insurance) is free for most people who paid Medicare tax for at least 10 years. Medicare Part B (doctor visits and outpatient care) costs money; the standard premium in 2024 is $174.70 per month, though it varies based on your income. Medicare Part D (prescription drugs) also costs money and varies by plan.
Your Part B and Part D premiums are based on your income from two years prior. If you had high income in 2022, you will pay more for Medicare in 2024. This is called Income-Related Monthly Adjustment Amount, or IRMAA. The higher your income, the higher your premiums climb.
How much Medicare costs in 2024
Part A is free for most people. Part B costs $174.70 per month for people with income below $97,000 (single) or $194,000 (married). If your income is higher, you pay more. Someone with income over $500,000 pays $560.50 per month for Part B.
Part D (prescription drug coverage) varies widely by plan and by pharmacy. Plans range from roughly $7 to $100+ per month, depending on which drugs you take and which plan you choose. You pick a plan during the annual enrollment period in the fall.
If you choose a Medicare Advantage plan (Part C) instead of Original Medicare, you typically pay a lower or zero premium for Part A and B combined, but you may pay more out of pocket when you use care. Costs vary by plan and location.
Taxes on your Social Security benefits
Social Security benefits themselves may be taxable, depending on your total income in retirement. If your combined income — wages, pensions, interest, plus half your Social Security benefits — exceeds certain thresholds, you will owe federal income tax on part of your benefits.
For a single person, if combined income is between $25,000 and $34,000, up to 50% of your benefits may be taxable. If it exceeds $34,000, up to 85% may be taxable. For married couples filing jointly, the thresholds are $32,000 and $44,000.
These thresholds have not changed since 1984, so more people are affected now than in the past. Many states do not tax Social Security benefits at all, but some do. Check your state's tax rules if you live in a state with income tax.
What happens if you work while receiving Social Security
If you claim Social Security before your full retirement age and continue to work, Social Security will reduce your benefits. In 2024, they deduct $1 in benefits for every $2 you earn above $23,400. The year you reach full retirement age, the reduction is $1 for every $3 you earn above $62,160, but only for earnings before the month you reach full retirement age.
Once you reach your full retirement age, you can earn as much as you want with no reduction to your benefits. You still pay Social Security and Medicare tax on those wages, but your benefits do not go down.
Understanding your pay stub and tax forms
Your pay stub shows "FICA" taxes, which stands for Federal Insurance Contributions Act. This line includes both Social Security and Medicare. You will see it listed as two separate items: one for Social Security (6.2%) and one for Medicare (1.45%).
At the end of the year, your employer sends you a W-2 form showing how much you paid in Social Security and Medicare tax. When you file your taxes, you do not claim these as deductions — they are already withheld. Self-employed people report these taxes on Schedule SE and can deduct half on their tax return.
If you are retired and receiving Social Security, you will get a Form SSA-1099 showing your benefit amount. If any of your benefits are taxable, you report that on your federal tax return.
Frequently Asked Questions
Do I pay Medicare tax after I turn 65?
Only if you are still working. Once you retire and stop earning wages, the 1.45% Medicare payroll tax stops. You will instead pay Medicare premiums for the coverage you choose. If you keep working past 65, you continue to pay the payroll tax until you retire.
Why is my Medicare premium higher than my neighbor's?
Medicare premiums for Part B and Part D are based on your income from two years earlier. If you had higher income that year, you pay higher premiums through IRMAA. Your neighbor may have had lower income, so they pay the standard premium. This adjusts each year based on your current income.
Can I get a refund of the Medicare tax I paid while working?
No. Medicare tax you paid while working does not come back to you as a refund. Instead, it funds the Medicare program, and once you turn 65 and enroll, you benefit from that program through your coverage. You do not get credit for past taxes paid.
What if I never worked long enough to pay Medicare tax?
You can still buy Medicare Part A at age 65 if you do not have it free. The premium in 2024 is $278 per month if you have fewer than 30 quarters of coverage, or $505 per month if you have fewer than 30 quarters. You will always pay for Part B and Part D if you enroll in those.
Do I owe taxes on my entire Social Security check?
Usually not. Most people do not owe tax on their benefits. You only owe tax if your combined income (wages, pensions, interest, plus half your benefits) exceeds the thresholds set by the IRS. Many retirees fall below those thresholds and owe nothing.