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

Medicare tax is a payroll tax that funds the Medicare program. You pay 1.45% of your gross wages, and your employer pays another 1.45% — that adds up to 2.9% total. This comes out of your paycheck automatically if you're a W-2 employee, and you see it listed as "Medicare" or "Med Tax" on your pay stub.

If you're self-employed, you pay both halves yourself: 2.9% of your net self-employment income. The IRS lets you deduct half of what you pay as a business expense, which reduces your taxable income slightly, but you still owe the full 2.9%.

There's also an Additional Medicare Tax of 0.9% that applies only to higher earners. This kicks in at $200,000 of wages per year for single filers, $250,000 for married couples filing jointly, and $125,000 for married couples filing separately. Your employer withholds this automatically once you cross that threshold in a calendar year.

Key Takeaways

  • You pay 1.45% of your wages toward Medicare, and your employer pays another 1.45%.
  • Self-employed people pay the full 2.9% themselves, though they can deduct half of it on their tax return.
  • An additional 0.9% Medicare tax applies to wages above $200,000 (single) or $250,000 (married filing jointly).
  • Medicare tax is withheld automatically from your paycheck and appears on your pay stub.
  • You cannot opt out of Medicare tax — it is required for all wage earners and self-employed individuals.

How the 1.45% employee portion works

When you're paid as a W-2 employee, your employer withholds 1.45% of your gross wages for Medicare before you receive your paycheck. This happens on every paycheck, regardless of how much you earn. Your employer then sends that money to the IRS along with their matching 1.45% contribution.

The 1.45% is calculated on your gross wages — the amount before any other deductions like federal income tax, Social Security tax, or health insurance premiums. So if you earn $2,000 in a pay period, Medicare tax is $29, even if your take-home pay is lower after other deductions.

You can see exactly how much Medicare tax was withheld by looking at your pay stub. It's usually listed separately from Social Security tax (which is 6.2%) and federal income tax withholding. Over the course of a year, these amounts add up and appear on your W-2 form in Box 6.

How the 2.9% self-employment rate works

If you're self-employed — a freelancer, contractor, or small business owner — you pay both the employee and employer portions of Medicare tax yourself. That's 2.9% of your net self-employment income, calculated on Schedule SE when you file your taxes.

Self-employment income is your business profit after deducting business expenses. You don't pay Medicare tax on the gross revenue; you calculate it on what's left after legitimate business costs. For example, if you earned $50,000 but had $10,000 in deductible expenses, you'd pay Medicare tax on roughly $40,000.

The IRS allows you to deduct half of your self-employment tax (both the Social Security and Medicare portions) as a business expense on your tax return. This reduces your adjusted gross income, which can lower your overall tax bill. However, you still owe the full 2.9% Medicare tax upfront — the deduction just gives you some relief when you file.

The Additional Medicare Tax for high earners

If your wages exceed certain thresholds in a single year, you owe an Additional Medicare Tax of 0.9% on the amount above the threshold. For 2024, those 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 automatically once your cumulative wages hit the threshold in that calendar year. If you have multiple jobs, each employer withholds based only on what they pay you, so you might end up overwithholding. You can claim the overpayment when you file your tax return and receive a refund.

Self-employed people calculate Additional Medicare Tax on Schedule SE and pay it when they file their annual return. The thresholds are the same, but the calculation includes all your self-employment income combined, not just wages from one employer.

Where Medicare tax money goes

Medicare tax funds the Medicare program, which provides health insurance to people age 65 and older, some younger people with disabilities, and people with end-stage renal disease. The money you pay in now goes directly to cover current Medicare benefits — it's not set aside in an individual account for your future use.

When you turn 65, you become may be able to access for Medicare Part A (hospital insurance) and Part B (medical insurance) based on your age and work history, not on how much Medicare tax you paid. The amount you paid doesn't determine your benefits; it straightforward funds the program for all beneficiaries.

How Medicare tax appears on your tax documents

On your W-2 form, Medicare tax withheld appears in Box 6. This is the 1.45% that your employer deducted from your paychecks throughout the year. If you earned wages above the Additional Medicare Tax threshold, the additional 0.9% withheld also appears in Box 6.

On your 1040 tax return, you report Medicare tax information on Schedule 2 if you owe Additional Medicare Tax. Self-employed individuals report their Medicare tax on Schedule SE, which calculates both the regular 2.9% and any additional 0.9% owed.

Your pay stubs throughout the year show a running total of Medicare tax withheld. At the end of the year, add up all the Medicare tax from every pay stub — it should match the amount shown in Box 6 of your W-2.

Medicare tax rates have stayed the same since 1985

The 1.45% employee rate and 1.45% employer rate have not changed since 1985. The Additional Medicare Tax of 0.9% was added in 2013 as part of the Affordable Care Act and applies only to higher earners. Congress would have to pass new legislation to change any of these rates.

Unlike Social Security tax, which has a wage cap (you stop paying after earning $168,600 in 2024, though this changes yearly), Medicare tax has no wage cap. You pay 1.45% on every dollar you earn, no matter how high your income goes. The Additional Medicare Tax is the only Medicare tax that increases with income.

Frequently Asked Questions

Can I opt out of paying Medicare tax?

No. Medicare tax is mandatory for all W-2 employees and self-employed individuals. There are no exemptions based on age, health status, or religious beliefs. Your employer must withhold it, and you must pay it.

Why do I see Medicare tax on my pay stub if I'm not 65 yet?

Medicare tax funds the current Medicare program for all beneficiaries, not just an account for your future retirement. You pay in now so that current seniors and disabled beneficiaries receive their benefits. When you turn 65, the Medicare tax paid by workers at that time will help fund your coverage.

What's the difference between Medicare tax and Social Security tax?

Social Security tax is 6.2% (employee) and funds retirement, disability, and survivor benefits. Medicare tax is 1.45% (employee) and funds health insurance for seniors and some disabled people. Both are withheld from your paycheck, but they fund different programs with different benefit structures.

If I have two jobs, do I pay Medicare tax on both?

Yes. Each employer withholds 1.45% Medicare tax on the wages they pay you. Unlike Social Security tax, which has a wage cap, there's no limit on how much Medicare tax you pay across multiple jobs. If your combined wages exceed the Additional Medicare Tax threshold, you may owe extra, which you can claim back on your tax return.

How much Medicare tax will I pay over my lifetime?

This depends on your earnings and how long you work. If you earn $50,000 per year for 40 years, you'd pay roughly $29,000 in Medicare tax (1.45% × $50,000 × 40). Higher earners pay more because there's no wage cap. The Additional Medicare Tax increases this for earners above the threshold.