The Additional Medicare Tax is a 0.9% payroll tax on wages above a threshold

The Additional Medicare Tax is a 0.9 percent tax on wages and self-employment income that exceeds a certain amount each year. Unlike the standard Medicare tax (which is 1.45 percent on all wages), this extra tax only applies to income above the threshold. The threshold depends on your filing status: $200,000 for single filers, $250,000 for married couples filing jointly, and $125,000 for married couples filing separately.

Your employer withholds this tax from your paycheck if your wages cross the threshold. If you are self-employed, you pay it when you file your tax return. The tax funds Medicare Part A (hospital insurance), the same program as the standard Medicare tax.

Key Takeaways

  • Additional Medicare Tax is 0.9 percent on wages above $200,000 (single), $250,000 (married filing jointly), or $125,000 (married filing separately).
  • Your employer automatically withholds this tax if your wages exceed the threshold; you do not need to do anything.
  • Self-employed people calculate and pay this tax on their tax return, not through payroll withholding.
  • If you have multiple jobs or uneven income, you may owe more tax than your employer withheld, and you will settle the difference when you file.

When the Additional Medicare Tax applies to your wages

The Additional Medicare Tax kicks in the moment your wages for the year exceed your threshold. If you earn $210,000 as a single filer, you owe 0.9 percent on the $10,000 above $200,000—that is $90 in additional tax.

Your employer is responsible for withholding this tax once you cross the threshold. They use your W-4 form and pay history to estimate whether you will hit the limit by year's end. If you have two jobs, neither employer may know about the other's wages, so you could end up underpaying during the year. You will owe the difference when you file your tax return in April.

How self-employed people pay the Additional Medicare Tax

If you are self-employed, you do not have an employer to withhold the tax. Instead, you calculate it yourself on Schedule SE (Self-Employment Tax) when you file your return. You pay both the employee and employer portions of Medicare tax on your net self-employment income, plus the 0.9 percent additional tax on income above your threshold.

Self-employed income includes net profit from a business, rental income, and certain other sources. You will need to track your income throughout the year so you know whether you will owe the additional tax. Some self-employed people make quarterly estimated tax payments to avoid a large bill in April; the additional Medicare tax can be included in those payments.

Multiple jobs and uneven income can change what you owe

The Additional Medicare Tax is based on your total wages across all jobs, not on what any single employer withholds. If you have two jobs that each pay $150,000, your combined income is $300,000—well above the $200,000 threshold if you are single. But each employer may withhold as if you only earn $150,000 from them, so neither withholds the additional tax.

When you file your return, you report all wages and the total additional Medicare Tax you should have paid. If your employers did not withhold enough, you owe the difference. If they withheld too much (which can happen if one job ended partway through the year), you get a refund. This is why it matters to file accurately and on time.

How to report the Additional Medicare Tax on your return

If you are an employee, your employer reports the additional Medicare Tax they withheld on your W-2 form in Box 6. You transfer this amount to your Form 1040 (the main tax return form) on the line for Medicare tax. If your employers withheld less than you owe, you calculate the shortfall and add it to your tax bill.

If you are self-employed, you calculate the additional Medicare Tax on Schedule SE and carry it to Form 1040. The IRS provides a worksheet to help you figure out how much you owe if you have both wages and self-employment income. If you are unsure how to calculate it, a tax preparer or the IRS website can walk you through the steps.

The difference between Additional Medicare Tax and standard Medicare Tax

Standard Medicare Tax is 1.45 percent on all your wages, with no threshold. Your employer withholds it from every paycheck, and you pay it no matter how much you earn. The Additional Medicare Tax is a separate 0.9 percent on top of that, but only on income above the threshold.

Together, they fund the same Medicare Part A program. The additional tax was created in 2013 as part of the Affordable Care Act to help shore up Medicare's finances. It applies to high earners and is one of several taxes that changed around that time.

What happens if you underpay or overpay

If you underpay the Additional Medicare Tax during the year, you owe the shortfall when you file your return. The IRS does not charge a penalty for underpayment of Medicare tax specifically, but you may owe interest if you pay late. Filing and paying on time avoids interest charges.

If your employer withheld too much—for example, because you changed jobs or had a leave of absence—you get the overpayment back as part of your refund. This is why it is important to file your return even if you think you will owe money; the IRS uses your return to calculate what you actually owe versus what was already withheld.

Frequently Asked Questions

Do I have to do anything if my employer withholds the Additional Medicare Tax?

No. Your employer handles the withholding automatically once your wages exceed the threshold. You do not need to fill out any forms or contact your employer. Just make sure your W-2 is accurate when you file your return.

What if I have two jobs and neither one withholds the Additional Medicare Tax?

You will owe the tax when you file your return because your combined income exceeds the threshold. Report all wages from both jobs on your return, and the IRS will calculate what you owe. You pay the difference between what should have been withheld and what actually was.

Does the Additional Medicare Tax explore to retirement income or Social Security?

No. The Additional Medicare Tax applies only to wages, self-employment income, and certain other earned income. Retirement account withdrawals, Social Security benefits, and investment income do not count toward the threshold.

Can I adjust my W-4 to avoid underpaying the Additional Medicare Tax?

You can ask your employer to withhold extra money from your paycheck, but the W-4 form does not have a specific line for Additional Medicare Tax. If you have multiple jobs, you may want to increase withholding on one of them to cover the additional tax you expect to owe.

Is the Additional Medicare Tax the same in every state?

Yes. The Additional Medicare Tax is a federal tax that applies the same way everywhere. Some states have their own income taxes, but those are separate from the Additional Medicare Tax.