Medicare tax is a fixed percentage of your wages, split between you and your employer

Medicare tax is 2.9% of your gross wages. You pay half (1.45%), your employer pays the other half (1.45%). If you're self-employed, you pay both halves yourself—2.9% total. There's no cap on Medicare tax the way there is on Social Security tax, so you pay it on every dollar you earn, no matter how much you make.

The only exception is the Additional Medicare Tax, which adds 0.9% on wages above a threshold. For 2024, that threshold is $200,000 for single filers and $250,000 for married couples filing jointly. Your employer withholds this extra amount automatically if you cross the threshold.

Key Takeaways

  • Medicare tax is 1.45% of your wages withheld from your paycheck, plus 1.45% paid by your employer.
  • Self-employed people pay the full 2.9% themselves, calculated on net self-employment income after deducting half the tax itself.
  • Unlike Social Security tax, Medicare tax has no wage cap—you pay it on all income above $1.
  • An Additional Medicare Tax of 0.9% applies to wages over $200,000 (single) or $250,000 (married filing jointly) and is withheld by your employer.
  • Medicare tax appears on your pay stub as "Medicare" or "Med Tax" and is separate from federal income tax withholding.

How the 1.45% employee portion is withheld

Your employer calculates Medicare tax on every paycheck by taking your gross wages (before any deductions except pre-tax benefits like health insurance) and multiplying by 1.45%. This amount is withheld from your pay and sent to the IRS along with the employer's matching 1.45%.

Gross wages means your salary or hourly rate before taxes, but after certain pre-tax deductions. If you earn $3,000 in a pay period, your Medicare tax is $43.50. If you earn $5,000, it's $72.50. The calculation is straightforward because there's no threshold to reach first—the tax applies to the first dollar and every dollar after.

You'll see this withheld on every pay stub under a line labeled "Medicare," "Med Tax," or "FICA Medicare." FICA stands for Federal Insurance Contributions Act, the law that created both Social Security and Medicare taxes.

How self-employed people calculate Medicare tax

If you're self-employed, you pay both the employee and employer portions—2.9% total. But the calculation is slightly different because you're working from net self-employment income, not a gross paycheck.

Start with your net profit from self-employment (your business income minus business expenses). Multiply that by 92.35% to get your net self-employment income. Then multiply that result by 2.9% to get your Medicare tax. You can deduct half of this Medicare tax from your income when you file your tax return, which reduces your taxable income slightly.

For example: if your net self-employment profit is $50,000, your net self-employment income is $46,175 ($50,000 × 0.9235). Your Medicare tax is $1,339 ($46,175 × 0.029). You can deduct $669.50 of that when you file.

The Additional Medicare Tax on high earners

If your wages exceed certain thresholds, you owe an Additional Medicare Tax of 0.9% on the amount over the limit. For 2024, the thresholds are $200,000 for single filers, $250,000 for married couples filing jointly, and $125,000 for married couples filing separately.

Your employer is required to withhold this additional tax once your wages cross the threshold in a calendar year. If you have multiple jobs or your spouse also works, you may end up overpaying this tax during the year—for instance, if each of you earns $150,000 at separate jobs, you'll each hit the $200,000 threshold on your combined income, but your employers won't know that. You can claim a refund of the overpayment when you file your tax return.

Self-employed people calculate the Additional Medicare Tax the same way: 0.9% on net self-employment income above the threshold. You report this on Schedule SE when you file.

Where Medicare tax appears on your tax documents

On your W-2 form (issued by your employer), Medicare tax withheld appears in Box 6. The total wages subject to Medicare tax are in Box 5. These boxes show what was actually withheld during the year.

On your pay stub, Medicare tax is listed as a separate line item, usually grouped with Social Security tax under "FICA taxes" or listed on its own. The amount withheld each pay period depends on your pay frequency—weekly, biweekly, monthly, or other.

If you're self-employed, you report Medicare tax on Schedule SE (Self-Employment Tax), which you attach to your Form 1040 when you file your tax return. This is where you calculate both the employee and employer portions and claim the deduction for half the tax.

Why Medicare tax has no wage cap

Social Security tax stops once you reach a wage cap (in 2024, that's $168,600), but Medicare tax does not. Congress designed it this way because Medicare is meant to cover all workers throughout their working lives, regardless of income. Social Security, by contrast, is a wage-replacement program where benefits are tied to your earnings history, so a cap makes sense.

This means high earners pay Medicare tax on every dollar they make, plus the Additional Medicare Tax on income above the threshold. A person earning $500,000 pays 2.9% on all $500,000, plus an additional 0.9% on the amount over $200,000.

How to verify Medicare tax on your pay stub

Check your pay stub each pay period to make sure the Medicare tax withheld is correct. Multiply your gross wages by 1.45% and compare it to the amount shown on the stub. If you have multiple jobs or your income is very high, also check whether the Additional Medicare Tax is being withheld.

If the amount looks wrong, contact your employer's payroll department. Errors are usually straightforward—a wrong gross wage amount, or a misclassification of your income type. Payroll can correct it and adjust future withholding. If you believe you've overpaid Medicare tax during the year, you can claim a refund when you file your tax return, but only for the Additional Medicare Tax—the regular 1.45% employee portion is not refundable.

Frequently Asked Questions

Can I avoid paying Medicare tax?

No. Medicare tax applies to all wages and self-employment income. There are no exemptions based on age, income level, or employment type. Even if you're over 65 and already on Medicare, you still pay Medicare tax on your wages if you continue working.

Is Medicare tax the same as health insurance premiums?

No. Medicare tax funds the Medicare program itself. Health insurance premiums you pay for private coverage or employer plans are separate. Some of your Medicare tax goes toward Part A (hospital insurance) and Part B (medical insurance) when you become may be able to access at 65.

What happens if my employer doesn't withhold Medicare tax?

You're still liable for the tax. If your employer fails to withhold it, you'll owe it when you file your tax return, plus any penalties and interest. Report the error to the IRS and contact your employer's payroll department when ready to correct future paychecks.

Do I pay Medicare tax on tips?

Yes. Tips are considered wages and are subject to Medicare tax. You should report all tips to your employer, and they'll withhold Medicare tax on the total (wages plus tips).

How is Medicare tax different from Social Security tax?

Social Security tax is 6.2% (employee) and stops once you reach the wage cap ($168,600 in 2024). Medicare tax is 1.45% with no cap. Social Security benefits are based on your earnings history; Medicare is a health insurance program for people 65 and older. Both are FICA taxes withheld from your paycheck.