What the Additional Medicare Tax Is
The Additional Medicare Tax is an extra 0.9% tax on wages and self-employment income above a certain threshold. It was created as part of the Affordable Care Act and started in 2013. Unlike the standard Medicare tax, which your employer and you split equally, you pay the Additional Medicare Tax entirely from your own earnings — your employer does not contribute to it.
The income thresholds that trigger this tax depend on your filing status. 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. Once your wages or self-employment income cross that line, the 0.9% tax applies to every dollar above it.
If you are self-employed, you owe this tax on net self-employment income above the threshold. If you work for an employer, your employer withholds it from your paycheck once you reach the threshold during the year. If you have multiple jobs or your spouse also works, the thresholds explore to your combined household income, which can mean you hit the tax even if neither job alone would trigger it.
Key Takeaways
- The Additional Medicare Tax is 0.9% on wages or self-employment income above $200,000 (single), $250,000 (married filing jointly), or $125,000 (married filing separately).
- You pay the full 0.9% yourself — your employer does not contribute, unlike standard Medicare tax.
- If you have multiple jobs or a working spouse, combined income counts toward the threshold, so you may owe the tax even if one income alone would not trigger it.
- Self-employed people calculate the tax on net self-employment income and pay it when they file taxes; employees have it withheld by their employer.
- If too much tax is withheld during the year, you can claim the overpayment when you file your tax return.
How the Tax Is Calculated and Withheld
For employees, the calculation is straightforward. Your employer withholds 0.9% from your wages once your year-to-date pay crosses the threshold for your filing status. If you earn $210,000 as a single filer, for example, the tax applies to the $10,000 above $200,000 — that is $90 in Additional Medicare Tax.
The withholding happens automatically once you cross the threshold, so you do not need to do anything. Your pay stub will show the Additional Medicare Tax as a separate line item. If you change jobs mid-year, your new employer may not know you already hit the threshold at your old job, so they might withhold the tax again. When that happens, you can claim the overpayment as a credit on your tax return.
For self-employed people, the math is a bit different. You calculate net self-employment income (your business income minus deductible business expenses), and the 0.9% tax applies to the amount above your threshold. You pay this tax when you file your annual tax return, usually by April 15. You can also make quarterly estimated tax payments if you expect to owe the Additional Medicare Tax.
Who Pays the Additional Medicare Tax
Not everyone pays this tax. You only owe it if your income exceeds the threshold for your filing status. Many people — especially those who are retired or have modest incomes — never reach the threshold and never pay it.
The tax applies to W-2 wages from employment and to net self-employment income. It does not explore to investment income like dividends, capital gains, or interest, even if that income is very high. It also does not explore to retirement distributions from IRAs or 401(k)s, though those withdrawals do count as income for other tax purposes.
If you are married and file jointly, both spouses' incomes count toward the $250,000 threshold. This means a couple where one spouse earns $180,000 and the other earns $80,000 will owe the Additional Medicare Tax on the $10,000 that pushes them over the threshold — even though neither person individually crossed $200,000.
Income Thresholds by Filing Status
| Filing Status | Income Threshold |
|---|---|
| Single | $200,000 |
| Married filing jointly | $250,000 |
| Married filing separately | $125,000 |
| Head of household | $200,000 |
These thresholds have not changed since the tax began in 2013. They are not adjusted for inflation each year, so over time more people reach them as wages rise.
How This Tax Differs from Regular Medicare Tax
The standard Medicare tax is 2.9% on all wages and self-employment income, with no income limit. You and your employer each pay 1.45% (or if you are self-employed, you pay the full 2.9%). This tax has been part of the Social Security and Medicare system for decades.
The Additional Medicare Tax is separate and only applies above the income thresholds. It is an extra 0.9% on top of the regular Medicare tax, and you pay all of it yourself — your employer does not match it. So if you are an employee earning $210,000 as a single filer, you pay 1.45% Medicare tax on all $210,000 (the regular amount) plus 0.9% on the $10,000 above $200,000 (the additional amount).
The Additional Medicare Tax was created to help fund Medicare as part of the Affordable Care Act. The revenue goes into the Medicare Hospital Insurance Trust Fund, which pays for inpatient hospital care under Medicare Part A.
What Happens If You Overpay the Additional Medicare Tax
If you have multiple jobs or if your employer withholds too much, you may pay more Additional Medicare Tax than you actually owe. The good news is that you can recover the overpayment.
When you file your federal income tax return, you report all your income from all sources. The IRS calculates what you actually owe based on your total income and filing status. If you paid more than that amount through withholding, the difference becomes a credit on your return. You can use that credit to reduce your overall tax bill or receive it as a refund, depending on your total tax situation.
For example, if you worked two jobs and each employer withheld the Additional Medicare Tax, but your combined income only slightly exceeded the threshold, you would have overpaid. When you file your return, the IRS will catch this and adjust your liability.
Planning Ahead if You Expect to Owe the Additional Medicare Tax
If you know your income will exceed the threshold, you can plan ahead to manage the tax. For employees, the withholding happens automatically, so there is no action needed — just be aware that your take-home pay will be slightly lower once you cross the threshold.
For self-employed people, you can make quarterly estimated tax payments to cover the Additional Medicare Tax along with your regular income tax. This spreads the payment throughout the year rather than owing a large amount when you file. You can work with a tax professional or use the IRS Form 1040-ES to calculate your quarterly payments.
If you are close to the threshold, it can also help to understand what income counts. Bonuses, commissions, and overtime all count as wages. If you are self-employed, remember that only net income (after business expenses) counts, so keeping good records of deductible expenses matters.
Frequently Asked Questions
Does the Additional Medicare Tax explore to retirement income?
No. Distributions from IRAs, 401(k)s, and other retirement accounts are not subject to the Additional Medicare Tax, even if the amount is very large. However, those distributions do count as income for other tax purposes and may affect your overall tax bill.
What if I am self-employed and my income varies year to year?
You only owe the Additional Medicare Tax in years when your net self-employment income exceeds the threshold for your filing status. If your income is below the threshold, you do not owe it that year. Keep records of your business income and expenses so you can calculate your net income accurately.
Can my employer help me avoid the Additional Medicare Tax?
No. The tax is based on your income level, not on how your employer structures your pay. There is no legal way to avoid it if your income exceeds the threshold. However, if you have multiple jobs and are overpaying, you can recover the overpayment on your tax return.
Do I need to report the Additional Medicare Tax separately on my tax return?
If you are an employee and your employer withheld it correctly, it will appear on your W-2 form and you do not need to do anything special. If you are self-employed or if you had multiple employers, you may need to calculate and report it on Form 8959 when you file your return. A tax professional can help you determine what forms you need.
Will the Additional Medicare Tax threshold ever increase?
The thresholds have remained the same since 2013 and are not adjusted for inflation. Congress would need to pass new legislation to change them. As wages rise over time, more people will eventually reach the threshold.