What the Medicare Additional Tax is and who pays it
The Medicare Additional Tax is an extra 0.9% tax on wages and self-employment income above a certain threshold. It was created in 2013 as part of the Affordable Care Act to help fund Medicare. Unlike the standard Medicare tax that everyone pays, this additional tax only applies to higher earners — and the threshold depends on your filing status and whether you are married.
If you earn wages as an employee, your employer withholds this tax automatically once you cross the income threshold for your situation. If you are self-employed, you pay it when you file your tax return. The tax is separate from the standard 2.35% Medicare tax (1.45% employee + 1.45% employer, or 2.9% if self-employed) that applies to all income.
The key difference: the standard Medicare tax has no income limit. The Additional Tax only kicks in above the threshold and only applies to the income above that point.
Key Takeaways
- The Medicare Additional Tax is 0.9% on wages above $200,000 for single filers, $250,000 for married filing jointly, and $125,000 for married filing separately.
- Employers automatically withhold this tax from paychecks once your year-to-date wages exceed the threshold for your filing status.
- Self-employed people pay the Additional Tax on net self-employment income above the threshold when they file their tax return.
- The threshold amounts do not change from year to year, so the same dollar amount applies whether you file in 2024 or 2030.
- You may owe Additional Tax even if you do not owe income tax, because it is calculated separately.
Income thresholds by filing status
The threshold at which the Additional Tax begins depends on how you file your taxes:
| Filing Status | Threshold |
|---|---|
| Single | $200,000 |
| Married filing jointly | $250,000 |
| Married filing separately | $125,000 |
| Head of household | $200,000 |
| may have access to widow(er) | $250,000 |
These thresholds have remained the same since 2013 and do not adjust for inflation. That means more people may cross the threshold over time as wages rise.
How the tax is withheld from paychecks
If you are an employee, your employer is responsible for withholding the Medicare Additional Tax once your cumulative wages for the year reach the threshold. The withholding happens automatically — you do not need to do anything or notify your employer.
The withholding begins on the first paycheck after your year-to-date wages cross the threshold. If you change jobs during the year, each employer withholds based only on the wages they pay you, not your total income from all employers. This can mean you overpay the tax if your combined income from multiple jobs exceeds the threshold, but you can claim the overpayment back when you file your tax return.
For example, if you are single and earn $120,000 at one job and $100,000 at a second job, both employers may withhold the Additional Tax because neither sees your total income. You would then claim the overpayment on your return.
How self-employed people pay the Additional Tax
If you are self-employed, you do not have an employer to withhold the tax. Instead, you calculate and pay it yourself when you file your tax return using Form 8959 (Additional Medicare Tax). The tax applies to your net self-employment income above the threshold.
You can also make estimated tax payments throughout the year if you expect to owe the Additional Tax. This helps you avoid a large bill when you file. The IRS provides estimated payment vouchers and a schedule to guide you on when payments are due.
Self-employed people also pay the standard Medicare tax (2.9% of net self-employment income), so the Additional Tax is on top of that amount.
What income counts toward the threshold
The Additional Tax applies to wages, salaries, and self-employment income. It does not explore to investment income such as interest, dividends, capital gains, or rental income. It also does not explore to retirement distributions from IRAs or 401(k)s, Social Security benefits, or passive income from businesses in which you do not actively work.
If you have both wages and self-employment income, both count toward the threshold. For example, if you earn $180,000 in wages and $30,000 in self-employment income as a single filer, your total is $210,000, which exceeds the $200,000 threshold by $10,000. You would owe 0.9% on that $10,000.
Reclaiming overpayment on your tax return
If you overpaid the Medicare Additional Tax — usually because you had multiple employers or changed jobs — you can claim the overpayment back when you file your return. You calculate the correct amount owed based on your total income for the year, and the IRS refunds any excess withholding.
You report this on Form 8959 if you are self-employed or had multiple employers. If you only had one employer and they withheld too much, the overpayment is usually caught automatically when you file, and you receive it as part of your refund.
Frequently Asked Questions
Do I owe the Medicare Additional Tax if I am retired?
Only if you have earned income (wages or self-employment income) above the threshold. Social Security, pensions, and retirement account withdrawals do not count. If you work part-time in retirement and earn above the threshold, yes, you owe the tax on that earned income.
Can I avoid the Medicare Additional Tax by splitting income with my spouse?
No. The threshold is based on your filing status, not on how you divide income between spouses. If you are married filing jointly, the combined income of both spouses counts toward the $250,000 threshold.
What if I only owed the Additional Tax for part of the year?
Your employer withholds it only on income above the threshold, so you pay it only on the portion of your income that exceeds the limit. If you earned $205,000 as a single filer, you owe 0.9% only on the $5,000 above the $200,000 threshold, not on your entire income.
Does the Additional Tax count toward my Medicare benefits?
The Additional Tax funds Medicare, but it does not increase your benefits or change your coverage. Your Medicare benefits are based on your age and enrollment status, not on how much Additional Tax you pay.
What happens if I do not pay the Additional Tax?
If your employer did not withhold it and you do not pay it when you file your return, the IRS will assess penalties and interest. It is treated like any other unpaid tax debt. If you expect to owe it, paying estimated taxes or arranging a payment plan can help you avoid penalties.