The 2024 Medicare tax rate is 2.9% of your wages, split between you and your employer

If you work, you pay 1.45% of your gross wages toward Medicare Part A (hospital insurance), and your employer pays the other 1.45%. That 2.9% total has not changed since 1992. If you are self-employed, you pay the full 2.9% yourself, though you can deduct half of it on your taxes.

There is also an additional Medicare tax of 0.9% that applies only to higher earners. This extra tax started in 2013 and applies to wages above $200,000 per year for single filers, $250,000 for married couples filing jointly, and $125,000 for married couples filing separately. Unlike the standard 2.9% tax, this additional 0.9% is not split with your employer — you pay all of it.

The tax is withheld automatically from your paycheck if you are an employee. If you are self-employed, you pay it when you file your annual tax return as part of your self-employment tax.

Key Takeaways

  • The standard Medicare tax rate is 1.45% of your wages (your share) plus 1.45% from your employer, totaling 2.9%.
  • Self-employed people pay the full 2.9% themselves but can deduct half on their tax return.
  • An additional 0.9% Medicare tax applies to wages over $200,000 (single) or $250,000 (married filing jointly), and you pay all of it.
  • Medicare tax is withheld automatically from paychecks for employees; self-employed workers pay it when filing taxes.
  • The 2.9% base rate has remained the same since 1992 and does not change year to year.

How the additional 0.9% tax works if you earn above the threshold

The additional 0.9% Medicare tax is withheld from your paycheck once your wages cross the income threshold for your filing status. Your employer is required to withhold it, but they only know about income from that one employer — they do not know if you have other jobs or other income sources.

This matters if you have multiple jobs. If you earn $180,000 at one job and $80,000 at another, both employers might withhold the extra 0.9% tax on their full payroll, even though your combined income is $260,000. You would then claim a credit on your tax return to recover the overpayment. To avoid this, you can ask one employer to withhold extra federal income tax instead, which gives you more control.

If you are married and both spouses work, each person's threshold is separate. A married couple filing jointly has a combined threshold of $250,000, but each spouse's income is tracked individually for withholding purposes.

What happens to the money you pay in Medicare tax

The Medicare tax you pay goes into the Hospital Insurance Trust Fund, which pays for Medicare Part A benefits. Part A covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health services. The tax does not fund Medicare Part B (doctor visits and outpatient care) or Part D (prescription drugs) — those come from general federal revenue and beneficiary premiums.

The trust fund is separate from Social Security. Your Medicare tax contributions are tracked, but Medicare Part A does not work like Social Security — you do not need to have paid a certain amount to be covered. Once you turn 65, you are covered by Medicare Part A if you are a U.S. citizen or permanent resident, regardless of how much you paid in taxes during your working years.

Self-employed workers and the full Medicare tax

If you are self-employed, you pay both the employee and employer share of Medicare tax — the full 2.9% — on your net self-employment income. You also pay the additional 0.9% tax if your net self-employment income exceeds the same thresholds as wage earners ($200,000 single, $250,000 married filing jointly).

When you file your tax return, you calculate self-employment tax on Schedule SE. The good news is that you can deduct half of your total self-employment tax (both the 2.9% and the 0.9% portion) as an adjustment to income on your Form 1040. This reduces your taxable income, which lowers your overall tax bill.

If you have both W-2 wages and self-employment income, the thresholds for the additional 0.9% tax explore to your combined income. You will need to track both sources when you file.

Medicare tax if you are retired or not working

If you are already retired and receiving Social Security or pension income, you do not pay Medicare tax on that money. Medicare tax only applies to wages from employment or net income from self-employment.

Once you turn 65 and enroll in Medicare, you pay premiums for Part B and Part D (if you choose it), but those are separate from Medicare tax. Part B premiums are deducted from your Social Security check automatically, or you pay them directly to Medicare. The amount depends on your income from two years prior — higher earners pay more.

How Medicare tax differs from Medicare premiums

Medicare tax and Medicare premiums are two different things, and the confusion between them is common. Medicare tax is what you pay while you are working — it funds the Hospital Insurance Trust Fund. Medicare premiums are what you pay once you are enrolled in Medicare, usually starting at age 65.

Part B premiums in 2024 start at $174.70 per month for most people, though higher earners pay more based on income. Part D premiums vary by plan and insurance company. These premiums are separate from any Medicare tax you may still owe if you continue working past 65.

If you work past 65 and earn wages, you continue to pay the 1.45% Medicare tax (or 2.35% if you are above the threshold for the additional tax) on those wages, even though you are already enrolled in Medicare and paying premiums.

What to ask your employer or tax preparer

If you are unsure whether the right amount of Medicare tax is being withheld from your paycheck, ask your employer's payroll or HR department to review your W-4 form and recent pay stubs. They can confirm that the 1.45% is being withheld correctly and that the additional 0.9% is being applied if your income is above the threshold.

If you have multiple jobs, ask each employer whether they are aware of your other income. They will not be, so you may need to adjust your withholding to avoid overpaying the additional 0.9% tax. A tax preparer or the IRS can help you sort this out when you file your return.

If you are self-employed, a tax preparer can help you calculate the correct self-employment tax on Schedule SE and make sure you are claiming the deduction for half of it on your Form 1040.

Frequently Asked Questions

Does Medicare tax go up every year?

No. The base Medicare tax rate of 1.45% (employee share) has been the same since 1992. The additional 0.9% tax has been in place since 2013 and has not changed. The income thresholds for the additional 0.9% tax do not adjust for inflation — they remain $200,000 (single) and $250,000 (married filing jointly).

What if I did not pay Medicare tax during my working years?

You are still covered by Medicare Part A at age 65 if you are a U.S. citizen or permanent resident. Medicare Part A coverage does not depend on how much you paid in taxes. However, if you did not pay Medicare tax for at least 40 quarters (10 years), you may have to pay a premium for Part A coverage, which is not free.

Can I opt out of paying Medicare tax?

No. Medicare tax is mandatory for all employees and self-employed people. There is no option to skip it or redirect it to a different program. It is withheld automatically from paychecks and calculated on self-employment income when you file taxes.

Do I still pay Medicare tax if I work past age 65?

Yes. If you continue to work and earn wages after 65, you pay Medicare tax on those wages at the same rate as anyone else — 1.45% (or 2.35% if you are above the income threshold). This is true even if you are already enrolled in Medicare and paying premiums.

How do I know if I owe the additional 0.9% tax?

Your employer withholds it automatically once your wages exceed the threshold for your filing status. If you have multiple jobs or other income sources, you may overpay and need to claim a credit on your tax return. Your tax preparer or the IRS can help you determine the correct amount owed.