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

Medicare tax comes out of your paycheck at a flat rate of 2.9 percent of your gross wages. Your employer withholds 1.45 percent, and you pay the other 1.45 percent. If you are self-employed, you pay the full 2.9 percent yourself, though you can deduct half of it when you file taxes.

This tax funds Medicare Part A, which covers hospital stays, skilled nursing care, and hospice. Unlike income tax, which varies based on your filing status and deductions, Medicare tax is the same percentage for everyone, no matter how much you earn—with one exception explained below.

The tax appears on your pay stub as "Medicare" or "Med Tax" and is separate from Social Security tax (which is 6.2 percent for employees). Together, these two make up what the IRS calls FICA taxes.

Key Takeaways

  • You pay 1.45 percent of your wages in Medicare tax, and your employer pays another 1.45 percent.
  • If you are self-employed, you pay the full 2.9 percent yourself but can deduct half when filing taxes.
  • High earners pay an additional 0.9 percent Medicare tax on wages above $200,000 (single) or $250,000 (married filing jointly).
  • Medicare tax has no wage cap, so you pay it on every dollar you earn, unlike Social Security tax.

The additional Medicare tax for high earners

If your wages exceed certain thresholds, you owe an extra 0.9 percent Medicare tax on the amount above that threshold. For single filers, the threshold is $200,000. For married couples filing jointly, it is $250,000. For married people filing separately, it is $125,000.

Your employer is required to withhold this additional tax once your wages cross the threshold in a calendar year. If you have multiple jobs and your combined wages push you over the limit, you may have overpaid the additional tax—you can claim a refund when you file your return.

This additional tax was introduced in 2013 as part of the Affordable Care Act and applies to both employees and self-employed people.

How Medicare tax differs from Social Security tax

Social Security tax stops once you hit the wage base limit for the year. In 2024, that limit is $168,600, meaning you stop paying Social Security tax once you earn that much. Medicare tax has no such cap—you pay 1.45 percent on every dollar you earn, whether you make $30,000 or $300,000.

This is why high earners pay a larger total percentage of their income in FICA taxes. A person earning $500,000 pays Social Security tax on only the first $168,600 of that income, but pays Medicare tax on all $500,000.

What happens if you are self-employed

Self-employed people pay both the employee and employer portions of Medicare tax, for a total of 2.9 percent. You calculate this on your net self-employment income (your business income minus business expenses) using Schedule SE when you file your tax return.

The IRS allows you to deduct half of your self-employment tax as an adjustment to income, which reduces your taxable income slightly. You also owe the additional 0.9 percent Medicare tax if your net self-employment income exceeds the same thresholds as wage earners.

If you are both self-employed and have a W-2 job, your employer withholds the employee portion of Medicare tax from your paycheck. You then calculate self-employment tax on your business income separately and report both on your return.

Medicare tax withholding on your pay stub

Your pay stub breaks down Medicare tax as a separate line item. It shows the 1.45 percent withheld from your gross pay before most deductions are taken. If you earn over the threshold for additional Medicare tax, you will see that 0.9 percent withheld as well, usually on a line labeled "Additional Medicare Tax" or "Med Tax - Additional."

The amount withheld is not negotiable—it is a fixed percentage set by federal law. You cannot reduce it by claiming exemptions or adjusting your W-4 form the way you can with income tax withholding.

How to verify your Medicare tax on your tax return

When you file your tax return, your employer reports the Medicare tax they withheld on your W-2 form in Box 6. If you are self-employed, you calculate and report it yourself on Schedule SE. The IRS uses these figures to confirm you paid the correct amount.

If you overpaid—for example, because you had multiple jobs and paid additional Medicare tax on income that should not have been subject to it—you can claim the overpayment as a refundable credit on Form 8959 when you file your return.

Frequently Asked Questions

Can I opt out of paying Medicare tax?

No. Medicare tax is mandatory for all employees and self-employed people. Some religious groups have exemptions from Social Security tax, but those exemptions do not extend to Medicare tax.

Does Medicare tax explore to all income?

Medicare tax applies to wages, salaries, and net self-employment income. It does not explore to investment income, interest, dividends, or capital gains. If you have a side business, Medicare tax applies only to your net profit from that business.

What if I paid too much Medicare tax across multiple jobs?

If your combined wages from all jobs exceeded the additional Medicare tax threshold, you may have overpaid. You can claim the overpayment on your tax return using Form 8959, and the IRS will refund the excess.

Is Medicare tax the same in every state?

Yes. Medicare tax is a federal tax set by the IRS and is the same across all states. Some states have their own income taxes, but those are separate from Medicare tax.