The Medicare tax rate is 2.9% of your wages, split equally between you and your employer
When you work, Medicare tax comes out of your paycheck at a rate of 1.45%. Your employer pays another 1.45% on your behalf, for a combined total of 2.9%. This is separate from Social Security tax and income tax withholding — it funds the Medicare program that covers hospital insurance, medical insurance, and prescription drug coverage once you turn 65.
If you are self-employed, you pay both the employee and employer portions yourself, which adds up to 2.9% of your net earnings. The IRS allows you to deduct half of this amount when you file taxes, but you still owe the full 2.9% to Medicare.
The 2.9% rate has been the same since 1966 and does not change year to year. However, there is an additional Medicare tax that applies to higher earners, which is explained in the sections below.
Key Takeaways
- You pay 1.45% of your wages in Medicare tax; your employer pays another 1.45%.
- Self-employed people pay the full 2.9% themselves but can deduct half when filing taxes.
- An additional 0.9% Medicare tax applies to wages above $200,000 (single filers) or $250,000 (married filing jointly).
- Medicare tax is withheld automatically from your paycheck and goes directly to the federal government.
- You cannot opt out of Medicare tax — it is required for all workers, regardless of age or whether you plan to use Medicare later.
The Additional Medicare Tax for Higher Earners
If your wages exceed a certain threshold, you owe an additional Medicare tax of 0.9% on the amount above that threshold. For single filers, the threshold is $200,000 per year. For married couples filing jointly, it is $250,000. For married people filing separately, it is $125,000.
This additional tax was introduced in 2013 as part of the Affordable Care Act. Unlike the standard 2.9% Medicare tax, your employer does not share this burden — you pay the full 0.9% yourself on earnings above the threshold. If you have multiple jobs or are self-employed in addition to a regular job, the thresholds explore to your combined income across all sources.
Your employer is responsible for withholding the additional Medicare tax from your paycheck once your wages cross the threshold. If you have more than one job, each employer withholds based only on what they pay you, which can result in under-withholding. You can adjust this when you file your tax return, or you can ask your employers to withhold extra Medicare tax voluntarily.
How Medicare Tax Withholding Works on Your Paycheck
Medicare tax is withheld automatically from every paycheck you receive as a wage earner. Your employer calculates 1.45% of your gross pay (before deductions for health insurance, retirement contributions, or other items) and sends it to the IRS along with their matching 1.45%. You see this line item on your pay stub labeled "Medicare Tax" or "Med Tax."
The withholding happens whether you are 25 or 65 years old, whether you already receive Medicare benefits, or whether you plan to work past 65. There is no way to opt out or defer Medicare tax — it is mandatory for all employees and self-employed people with net earnings of $400 or more per year.
If you change jobs during the year, each employer withholds Medicare tax independently. There is no annual cap on Medicare tax withholding, unlike Social Security tax, which stops once you reach a certain earnings threshold each year.
Medicare Tax for Self-Employed Workers
If you are self-employed, you report your Medicare tax on Schedule SE (Self-Employment Tax) when you file your annual tax return. You calculate 2.9% of your net self-employment income — that is, your business income minus business expenses and a deduction for half of your self-employment tax itself.
Self-employed workers pay both the employee and employer portions of Medicare tax, but the IRS allows you to deduct half of the total amount you pay. For example, if you owe $2,900 in Medicare tax, you can deduct $1,450 from your income before calculating your income tax. This deduction does not reduce the amount of Medicare tax you owe — only your taxable income for income tax purposes.
The additional 0.9% Medicare tax also applies to self-employed income above the same thresholds ($200,000 for single filers, $250,000 for married filing jointly). You report this on Form 8959 when you file your return.
What Happens to the Medicare Tax You Pay
The Medicare tax you pay goes into the Hospital Insurance Trust Fund, which pays for Medicare Part A benefits. Part A covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health services. This is different from the income tax you pay, which goes into the general Treasury, or Social Security tax, which funds Social Security benefits.
Medicare Part B (medical insurance) and Part D (prescription drug coverage) are funded partly by general tax revenue and partly by premiums that beneficiaries pay when they enroll. Your Medicare tax does not directly fund those programs, though all three are part of the overall Medicare system.
The Hospital Insurance Trust Fund has faced solvency concerns in recent years because more people are drawing benefits while fewer workers are paying in. Congress periodically discusses adjusting the Medicare tax rate or the earnings cap, but no changes have been made to the 2.9% rate since 1966.
Medicare Tax and Your Earnings Record
Every dollar of Medicare tax you pay is recorded by the Social Security Administration under your name and Social Security number. This record is separate from your Social Security benefit calculation — Medicare may be able to access is not based on how much Medicare tax you have paid, but rather on age, disability status, or end-stage renal disease.
You can view your earnings record by creating an account on ssa.gov and accessing your Social Security Statement. This statement shows your estimated Medicare may be able to access and your projected benefits, though it does not show Medicare tax specifically. If you notice errors in your earnings record, you can contact the Social Security Administration to correct them.
Even if you did not work long enough to receive Social Security benefits, you may still be covered by Medicare at 65 if you or your spouse paid Medicare tax for at least 10 years (40 quarters). This is one of the few situations where your Medicare tax payment history directly affects your may be able to access.
Frequently Asked Questions
Do I pay Medicare tax if I am already on Medicare?
Yes. If you are working and earning wages, you pay Medicare tax regardless of your age or whether you already receive Medicare benefits. The tax funds the Hospital Insurance Trust Fund for all beneficiaries, not just future ones. The only exception is if you are a student employed by your school and meet certain conditions, or if you are a member of certain religious groups that have been granted exemptions.
Can I deduct Medicare tax from my income taxes?
If you are an employee, no — Medicare tax is withheld from your paycheck and you cannot deduct it. If you are self-employed, you can deduct half of your self-employment tax (which includes Medicare tax) as an adjustment to income on your tax return. This reduces your taxable income but does not reduce the amount of Medicare tax you owe.
What is the difference between Medicare tax and Medicare premiums?
Medicare tax is a payroll tax you pay while working. Medicare premiums are fees you pay after you enroll in Medicare, usually deducted from your Social Security check. Part A (hospital insurance) has no premium for most people who paid Medicare tax for 10 years, but Parts B and D have monthly premiums that vary based on income.
Does the Medicare tax rate ever change?
The standard 2.9% rate has not changed since 1966. The additional 0.9% tax for high earners was added in 2013. Congress would need to pass new legislation to change either rate, which has not happened. The income thresholds for the additional tax are not adjusted for inflation.
What happens if my employer does not withhold Medicare tax?
You are still responsible for paying it. If your employer fails to withhold Medicare tax, you owe it when you file your tax return. You can also contact the IRS to report the non-compliance. If you are concerned about under-withholding, you can ask your employer to withhold extra amounts, or you can make estimated tax payments on your own.