Medicare Tax
A 1.45% payroll tax on all wages with no income cap, matched by employers. High earners pay an Additional Medicare Tax of 0.9% on wages over $200,000 (single).
Medicare tax funds the Medicare Hospital Insurance program. Unlike Social Security tax, there is no wage base limit — all wages are subject to the 1.45% Medicare tax. Your employer matches this rate, bringing the combined Medicare rate to 2.9%.
Since 2013, an Additional Medicare Tax of 0.9% applies to wages exceeding $200,000 for single filers, $250,000 for married filing jointly, or $125,000 for married filing separately. This additional tax is paid only by the employee; the employer does not match it.
Self-employed individuals pay the full 2.9% base Medicare tax as part of self-employment tax. They also owe the 0.9% Additional Medicare Tax if their self-employment income exceeds the thresholds. The total Medicare rate for a high-earning self-employed person can reach 3.8%.
Related Terms
FICA
Federal Insurance Contributions Act taxes that fund Social Security (6.2%) and Medicare (1.45%). Both employees and employers pay FICA, totaling 15.3% on wages.
Additional Medicare Tax
An extra 0.9% Medicare surtax on earned income above $200,000 (single) or $250,000 (married filing jointly). Unlike regular Medicare tax, it is not matched by employers.
Social Security Tax
A 6.2% payroll tax on wages up to the annual wage base ($176,100 in 2025), matched by your employer. Funds Social Security retirement, disability, and survivor benefits.
Self-Employment Tax
The combined Social Security (12.4%) and Medicare (2.9%) tax paid by self-employed individuals — effectively both the employee and employer shares of FICA, totaling 15.3%.
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