The Medicare tax rate is 2.9 percent of your wages, split between you and your employer

You pay 1.45 percent of your gross income toward Medicare, and your employer pays another 1.45 percent. That 2.9 percent combined is the standard Medicare tax rate for all workers covered by Social Security. If you are self-employed, you pay both halves yourself — 2.9 percent total — though you can deduct half of it when you file taxes.

There is also an additional Medicare tax of 0.9 percent that applies only to higher earners. If you earn more than $200,000 as a single filer, $250,000 as married filing jointly, or $125,000 as married filing separately, you pay this extra 0.9 percent on income above those thresholds. Your employer withholds it automatically if your wages cross the limit.

These percentages have been the same since 1966 for the standard rate and since 2013 for the additional tax. They do not change year to year.

Key Takeaways

  • The standard Medicare tax is 2.9 percent of your wages: 1.45 percent from you and 1.45 percent from your employer.
  • Self-employed workers pay the full 2.9 percent themselves but can deduct half of it on their tax return.
  • An additional 0.9 percent Medicare tax applies to wages above $200,000 (single), $250,000 (married filing jointly), or $125,000 (married filing separately).
  • Medicare tax is withheld from your paycheck automatically; you do not have to do anything to pay it.

How Medicare tax appears on your paycheck

Your employer withholds Medicare tax before you receive your pay. On a pay stub, you will see a line labeled "Medicare" or "Med Tax" showing 1.45 percent of your gross wages. This amount goes directly to the federal government, not into a personal account with your name on it.

If you earn over the income thresholds for additional Medicare tax, your employer will also withhold the extra 0.9 percent. This second withholding appears as a separate line, often labeled "Additional Medicare Tax" or "Medicare Surtax." Once your income drops below the threshold in a later pay period, the withholding stops.

The total Medicare tax you see on your stub does not include your employer's 1.45 percent contribution — that is paid separately by your employer and does not reduce your take-home pay.

What happens if you work for multiple employers

If you have more than one job, each employer withholds 1.45 percent Medicare tax on your wages from that job. The additional 0.9 percent tax is also withheld by each employer if your combined wages from all jobs cross the threshold.

This can result in overwithholding. If your total wages from all jobs exceed the threshold but no single employer knew about your other income, you may have paid more additional Medicare tax than you owe. You can claim a credit for the overpayment when you file your tax return, or you may receive a refund.

Self-employed workers and Medicare tax

If you are self-employed, you pay self-employment tax, which includes both the employee and employer portions of Medicare tax. The rate is 2.9 percent of your net self-employment income, calculated on Schedule SE of your tax return.

You do not pay this tax on your gross revenue — only on net income after business expenses. Once you calculate the amount owed, you can deduct half of it as a business expense on your tax return, which lowers your taxable income.

Self-employed workers also pay the additional 0.9 percent Medicare tax on self-employment income above the same thresholds as wage earners. This is calculated and reported on Form 8959 when you file your return.

Medicare tax versus Social Security tax

Medicare tax and Social Security tax are two separate payroll taxes. Social Security tax is 6.2 percent (employee) plus 6.2 percent (employer), for a total of 12.4 percent. Medicare tax is 2.9 percent total. Together, they make up what is called FICA tax on your pay stub.

The key difference: Social Security tax only applies to the first $168,600 of your wages in 2024 (this cap changes each year). Medicare tax has no wage cap — you pay it on all your income, no matter how much you earn. This is why high earners pay the additional 0.9 percent Medicare tax: it is the only payroll tax that continues to explore above a certain income level.

Where Medicare tax money goes

Medicare tax funds the Hospital Insurance Trust Fund, which pays for Medicare Part A benefits — hospital stays, skilled nursing care, hospice, and home health services. The money does not sit in an account with your name on it. Instead, current workers' Medicare taxes pay for current beneficiaries' care.

When you turn 65 and become may be able to access for Medicare, your Part A coverage is funded by the Medicare taxes that workers are paying at that time. The system is pay-as-you-go, not savings-based.

Frequently Asked Questions

Why do I pay Medicare tax if I am not on Medicare yet?

Medicare tax funds current beneficiaries' hospital care. You pay into the system while working so that when you turn 65, the next generation of workers funds your Part A coverage. It is a shared system across all ages.

Can I opt out of paying Medicare tax?

No. Medicare tax is mandatory for all workers covered by Social Security, with very limited exceptions for certain religious groups. If you are on a payroll, your employer must withhold it.

What if I did not pay Medicare tax for some years?

Your Medicare Part A coverage is based on your work history. You need 40 quarters of coverage (roughly 10 years of work) to be covered at age 65. If you have fewer quarters, you may still be covered through a spouse's work record or may need to pay a premium for Part A.

Does the additional 0.9 percent Medicare tax ever go away?

No. Once your income exceeds the threshold in a year, you continue to pay the additional 0.9 percent on all income above that threshold for the rest of that year. It does not reset until January 1st.

How do I know if I owe additional Medicare tax as a self-employed person?

Calculate your net self-employment income on Schedule SE. If that income exceeds $200,000 (single), $250,000 (married filing jointly), or $125,000 (married filing separately), you owe the additional 0.9 percent on the amount above the threshold. Form 8959 walks you through the calculation.