What the Additional Medicare Tax is and who pays it

The Additional Medicare 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. Unlike the regular Medicare tax (which is 1.45% on all wages), this extra tax only applies to income above a set amount — and the amount depends on your filing status and whether you're married.

For 2024, the thresholds are $200,000 for single filers, $250,000 for married couples filing jointly, and $125,000 for married people filing separately. If your wages or self-employment income go above these amounts, you owe 0.9% on the excess. Your employer withholds this tax from your paycheck if you're an employee. If you're self-employed, you pay it when you file your tax return.

Most people don't pay this tax — it only affects higher earners. But if you have multiple jobs, a spouse who also works, or significant self-employment income, you might cross the threshold without realizing 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) in 2024.
  • Employers automatically withhold this tax from paychecks once your wages exceed the threshold, but you may owe more at tax time if you have multiple jobs or a working spouse.
  • Self-employed people pay this tax when filing their tax return, calculated on net self-employment income above the threshold.
  • The threshold amounts do not change from year to year — they are fixed at these levels regardless of inflation.

How employers withhold the Additional Medicare Tax

If you're an employee, your employer is responsible for withholding the Additional Medicare Tax once your wages hit the threshold. The withholding starts automatically — you don't have to ask for it or fill out a special form. Your employer uses the W-4 you filed to track your income across the year and begins the 0.9% withholding once cumulative wages exceed the threshold for your filing status.

The problem arises when you have more than one job. Each employer withholds based only on what they pay you, not on your total income from all sources. If you earn $130,000 at one job and $130,000 at another, neither employer may withhold the Additional Medicare Tax because each sees income below $200,000. But your combined income is $260,000, so you owe tax on $60,000 of it. You'll have to pay the difference when you file your 2024 tax return in 2025.

To avoid this surprise, tell each employer about your other income on your W-4. You can also ask your employer to withhold extra Medicare tax voluntarily, even if you haven't crossed the threshold yet — this gives you more control over the amount withheld throughout the year.

How self-employed people calculate and pay this tax

If you're self-employed, you don't have an employer to withhold the tax for you. Instead, you calculate it yourself on Schedule SE (Self-Employment Tax) when you file your 2024 tax return. The tax applies to your net self-employment income — that is, your business income minus business expenses and the deductible portion of self-employment tax itself.

The calculation has two steps. First, you figure out your net self-employment income for the year. Then, if that income exceeds the threshold for your filing status, you multiply the excess by 0.9% to get the Additional Medicare Tax you owe. This amount goes on your Form 1040 when you file.

Self-employed people also pay the regular 2.9% self-employment tax (which covers both the employee and employer portions of Medicare tax) on all net self-employment income. The Additional Medicare Tax is on top of that. If you have both W-2 wages and self-employment income, the thresholds explore to your combined income from both sources.

What happens if you have both wages and self-employment income

If you receive W-2 wages from an employer and also have self-employment income, the Additional Medicare Tax threshold applies to your total income from both sources combined. Your employer withholds based on W-2 wages alone, so you may owe additional tax at filing time.

For example, suppose you earn $180,000 in W-2 wages and $40,000 in net self-employment income. Your total is $220,000, which exceeds the $200,000 threshold by $20,000. Your employer withheld nothing because your W-2 wages alone didn't cross $200,000. When you file your return, you'll owe 0.9% of $20,000, or $180, in Additional Medicare Tax.

To manage this, you can ask your employer to withhold extra Medicare tax on your W-4, or you can make estimated tax payments throughout the year. Either approach reduces the amount you'll owe when you file.

The thresholds and how they work across filing statuses

The 2024 thresholds are fixed amounts that do not adjust for inflation. Single filers and heads of household pay the tax on income above $200,000. Married couples filing jointly pay it on income above $250,000. Married people filing separately pay it on income above $125,000.

The threshold for married filing separately is notably lower — half of the joint threshold. This is intentional: it discourages married couples from filing separately to avoid the tax. If you and your spouse file separately, each of you has a $125,000 threshold, so combined you'd hit the tax sooner than if you filed jointly.

These thresholds have remained the same since 2013 and are not indexed to inflation. This means that over time, more people will eventually cross them as wages rise. The IRS does not announce changes to these thresholds each year because there are none.

What to ask your employer or tax preparer

If you're unsure whether you'll owe the Additional Medicare Tax in 2024, ask your employer or tax preparer these questions:

  • Based on my expected income for 2024, will I cross the Additional Medicare Tax threshold?
  • If I have multiple jobs, how should I coordinate withholding across employers to avoid a large bill at tax time?
  • Can I request extra Medicare tax withholding on my W-4 to cover self-employment income or income from a second job?
  • If I'm self-employed, how do I calculate the Additional Medicare Tax on Schedule SE?

When to contact the IRS or a tax professional

Contact a tax professional if you have multiple jobs, significant self-employment income, or income from investments that might push you over the threshold. They can help you plan withholding and estimate payments to avoid underpayment penalties.

If you received a notice from the IRS about unpaid Additional Medicare Tax, or if you're unsure whether you paid the correct amount on a past return, reach out to a tax preparer or call the IRS at 1-800-829-1040. You can also visit IRS.gov and search for "Additional Medicare Tax" to find worksheets and examples.

If you disagree with a tax bill or believe an error was made, you have the right to dispute it. A tax professional can help you file an amended return (Form 1040-X) if needed.

Frequently Asked Questions

Does the Additional Medicare Tax threshold change every year?

No. The thresholds have been $200,000 (single), $250,000 (married filing jointly), and $125,000 (married filing separately) since 2013 and do not change. They are not adjusted for inflation.

If I have two jobs and neither crosses the threshold, do I still owe the Additional Medicare Tax?

You may owe it at tax time if your combined income from both jobs exceeds the threshold. Each employer withholds based only on what they pay you, so neither may withhold the tax. You'll calculate what you owe when you file your return. To avoid this, tell each employer about your other income on your W-4.

Is the Additional Medicare Tax the same as regular Medicare tax?

No. Regular Medicare tax is 1.45% on all wages and applies to everyone. The Additional Medicare Tax is an extra 0.9% that only applies to income above the threshold. Together, the total Medicare tax can be up to 2.35% on high earners.

Do I pay Additional Medicare Tax on investment income?

No. The Additional Medicare Tax applies only to wages and self-employment income. It does not explore to interest, dividends, capital gains, or other investment income.

What if I'm retired and have no income — do I owe this tax?

No. If you have no wages or self-employment income, you don't owe the Additional Medicare Tax. It only applies to people with income above the threshold.