The Medicare tax rate on your earnings

Medicare tax is 2.9 percent of your wages. If you are self-employed, you pay the full 2.9 percent yourself. If you work for an employer, you and your employer each pay 1.45 percent — so 1.45 percent comes out of your paycheck, and your employer sends in another 1.45 percent on your behalf.

There is no income limit on Medicare tax the way there is on Social Security tax. You pay it on every dollar you earn, no matter how much you make in a year.

If you earn over a certain threshold — $200,000 for a single filer, $250,000 for married filing jointly — there is an additional 0.9 percent Medicare tax on the income above that amount. This extra tax comes only from your paycheck or self-employment income, not from your employer's share.

Key Takeaways

  • You pay 1.45 percent of your wages to Medicare if you work for an employer; your employer pays another 1.45 percent.
  • Self-employed people pay the full 2.9 percent themselves, though they can deduct half of it on their tax return.
  • Medicare tax has no earnings cap — you pay it on all your income, unlike Social Security tax.
  • An extra 0.9 percent Medicare tax applies to income above $200,000 (single) or $250,000 (married filing jointly).

How Medicare tax appears on your pay stub

On your pay stub, you will see a line labeled "Medicare" or "Med Tax" showing 1.45 percent of your gross pay deducted. This amount goes to the federal government to fund Medicare Part A, which covers hospital stays, skilled nursing, hospice, and home health care.

If your income crosses the $200,000 or $250,000 threshold during the year, your employer will begin withholding the additional 0.9 percent Medicare tax. Your employer is responsible for calculating when you hit that threshold and starting the withholding — you do not have to tell them.

Self-employment and Medicare tax

If you are self-employed, you pay both the employee and employer portions of Medicare tax, for a total of 2.9 percent on your net self-employment income. You send this in as part of your quarterly estimated tax payments or when you file your annual return.

The good news is that you can deduct half of your self-employment Medicare tax (and half of your self-employment Social Security tax) on your income tax return. This reduces your taxable income, though it does not reduce the amount you owe to Medicare itself.

Medicare tax and your benefits

Medicare tax you pay now funds current Medicare beneficiaries' care. It does not go into a personal account for you — instead, when you turn 65 and become may be able to access for Medicare, current workers' Medicare taxes will fund your benefits.

You do not have to pay Medicare tax to be may be able to access for Medicare at 65. may be able to access is based on age and U.S. citizenship or permanent residency, not on how much tax you have paid. However, if you worked and paid Medicare tax for at least 10 years, you will not have to pay a premium for Medicare Part A (hospital insurance).

What happens if you work past 65

If you continue working after you turn 65, you still pay Medicare tax on your wages. You will also be enrolled in Medicare Part A automatically at 65, even if you keep working. If you have employer health insurance and are still working, you may be able to delay enrolling in Medicare Part B (medical insurance) without penalty, but you cannot avoid Medicare tax.

Some people work part-time or have multiple jobs in retirement. Each employer withholds Medicare tax separately based on the wages they pay you. If your total income from all jobs crosses the $200,000 or $250,000 threshold, you may owe the additional 0.9 percent Medicare tax when you file your return.

Medicare tax versus Medicare premiums

Medicare tax and Medicare premiums are different. Medicare tax is what you pay while you work. Medicare premiums are what you pay after you turn 65 and enroll in Medicare — these are monthly charges for Part B (doctor visits and outpatient care) and Part D (prescription drugs), and optional charges for Part C (Medicare Advantage) or Medigap supplemental coverage.

Your lifetime Medicare tax payments do not reduce your premiums. Premiums are set by income level and the specific plan you choose, not by how much tax you paid while working.

Frequently Asked Questions

Does Medicare tax stop at a certain age?

No. If you work, you pay Medicare tax on your wages no matter your age. There is no age at which the tax stops being withheld from your paycheck.

Can I opt out of paying Medicare tax?

No. Medicare tax is mandatory for all employees and self-employed people. There are no exceptions based on religion, health status, or personal choice, unlike some other taxes.

What if I did not pay Medicare tax while working?

You can still enroll in Medicare at 65 based on age alone. However, if you did not pay Medicare tax for at least 10 years, you will have to pay a monthly premium for Part A instead of receiving it free.

How much of my Medicare tax goes to Part A versus other parts?

All of your Medicare tax goes to Part A (hospital insurance). Parts B, D, and supplemental coverage are funded by your monthly premiums and general tax revenue, not by Medicare tax.

If I am married and both working, do we each pay Medicare tax?

Yes. Each person pays Medicare tax on their own wages. The $250,000 threshold for the additional 0.9 percent tax applies to your combined household income, but each of you pays tax on your individual earnings.