Employee Medicare tax is a payroll deduction that funds Medicare Part A, the hospital insurance portion of the program

Your employer withholds 1.45% of your gross wages for Medicare tax on every paycheck. This is separate from Social Security tax (6.2%) and income tax withholding. The money goes directly to the federal government to fund Medicare Part A, which covers hospital stays, skilled nursing care, hospice, and home health services.

You pay this tax on all wages with no income limit — unlike Social Security tax, which stops after you earn a certain amount each year. If you are self-employed, you pay both the employee and employer portions (2.9% total), though you can deduct half of it on your tax return.

There is also an Additional Medicare Tax of 0.9% that applies to wages above a threshold. For 2024, that threshold is $200,000 for single filers and $250,000 for married couples filing jointly. Your employer withholds this automatically if your wages cross the threshold during the year.

Key Takeaways

  • Employee Medicare tax is 1.45% of your wages, withheld by your employer on every paycheck.
  • This tax funds Medicare Part A only — hospital insurance — not Parts B, C, or D.
  • There is no wage cap on Medicare tax, so you pay it on all income no matter how much you earn.
  • An additional 0.9% Medicare tax applies to wages above $200,000 (single) or $250,000 (married filing jointly).
  • Self-employed workers pay 2.9% total (both employee and employer shares) but can deduct half on their taxes.

Where the money goes and what it covers

The 1.45% you pay goes into the Medicare Hospital Insurance Trust Fund, which pays for Part A benefits. Part A covers inpatient hospital care, up to 100 days in a skilled nursing facility after a hospital stay, hospice care, and home health services. It does not cover doctor visits, outpatient care, prescription drugs, or routine preventive services — those are covered by Parts B and D, which are funded differently.

When you turn 65 and become may be able to access for Medicare, Part A is usually free because you have paid into it through payroll taxes during your working years. If you did not work long enough to may have access to for premium-free Part A, you can still purchase it, but the cost is higher than if you had paid the tax while employed.

How much you actually pay over a year

The amount you pay depends on your annual wages. If you earn $50,000 a year, you pay $725 in Medicare tax (1.45% of $50,000). If you earn $100,000, you pay $1,450. If you earn $200,000, you pay $2,900 in regular Medicare tax plus $900 in Additional Medicare Tax, for a total of $3,800.

These amounts are split between you and your employer — your employer withholds your share from your paycheck and also pays an equal 1.45% on your behalf. The employer portion does not come out of your wages, but it is part of your total compensation cost to the company.

The Additional Medicare Tax threshold and how it works

If your wages exceed $200,000 (or $250,000 if married filing jointly), you owe an extra 0.9% Medicare tax on the amount above the threshold. This is withheld automatically by your employer once your year-to-date wages cross the limit.

The threshold is based on your filing status, not your household income. If you are married and file jointly, the threshold is $250,000 combined. If you are married and file separately, it is $125,000 each. Single filers use $200,000. If you have two jobs and your combined wages cross the threshold, you may overpay the Additional Medicare Tax during the year — you can claim a refund when you file your tax return.

Medicare tax for self-employed workers

If you are self-employed, you pay both the employee and employer portions of Medicare tax, totaling 2.9% of your net self-employment income. You calculate this on Schedule SE (Self-Employment Tax) when you file your annual tax return, not through payroll withholding.

The Additional Medicare Tax of 0.9% also applies to self-employed income above the same thresholds ($200,000 single, $250,000 married filing jointly). You report this on Form 8959 when you file. The good news: you can deduct half of your total self-employment tax (both the regular 2.9% and the Additional 0.9%) as an adjustment to income, which lowers your taxable income.

What happens if you work after age 65

You continue to pay Medicare tax on your wages even after you turn 65 and enroll in Medicare. The tax does not stop — it keeps funding the Medicare Hospital Insurance Trust Fund for current and future beneficiaries. You cannot opt out of Medicare tax withholding, even if you are already on Medicare.

If you are still working and earning above the Additional Medicare Tax threshold, you pay that 0.9% as well. Some people mistakenly think they stop paying Medicare tax once they are may be able to access, but the withholding continues as long as you are employed and earning wages.

How to check your Medicare tax on your pay stub

Look at your pay stub under the section labeled "Taxes" or "Deductions." You should see a line for "Medicare" or "Med Tax" showing 1.45% of your gross wages. If your wages are high enough, you may also see a line for "Additional Medicare Tax" or "Additional Med Tax" showing 0.9% on the amount above the threshold.

Your employer should also send you a W-2 form at the end of the year showing total Medicare tax withheld in Box 6. You can cross-check this against your pay stubs to make sure the amount is correct. If you notice a discrepancy, contact your payroll or human resources department.

Frequently Asked Questions

Can I avoid paying Medicare tax?

No. Medicare tax is mandatory for all employees and self-employed workers. There is no exemption based on age, income, or religious belief. The only way to stop paying it is to stop earning wages.

Is Medicare tax the same as Medicare premiums?

No. Medicare tax is the payroll deduction you pay while working. Medicare premiums are what you pay for coverage after you turn 65 — Part B (doctor visits) and Part D (prescription drugs) have monthly premiums, while Part A is usually free if you paid enough Medicare tax while working.

What if I work in two jobs — do I pay Medicare tax twice?

Yes, you pay 1.45% Medicare tax on wages from both jobs. If your combined wages exceed the Additional Medicare Tax threshold, you may overpay the 0.9% during the year. You can claim a refund on your tax return for any overpayment of Additional Medicare Tax.

Does Medicare tax go toward my own future benefits?

Not directly. Medicare is a pay-as-you-go system — the tax you pay today funds benefits for current retirees and disabled beneficiaries. When you turn 65, your benefits are funded by taxes paid by workers at that time. You do not have an individual account or balance.

What happens to Medicare tax if I become disabled before 65?

You continue to pay Medicare tax on your wages. If you are approved for Social Security Disability Insurance (SSDI), you become may be able to access for Medicare after 24 months of receiving SSDI benefits, regardless of age. Your prior Medicare tax payments help you may have access to for premium-free Part A.