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%.
How it works
Medicare tax funds the Medicare Hospital Insurance program and is charged at 1.45% of all your wages, with no annual cap at all — unlike Social Security tax, which stops once you hit the wage base. Your employer matches your 1.45% with their own 1.45%, bringing the combined Medicare rate to 2.9% once employer and employee shares are added together, and that full 2.9% applies to every dollar of wages you earn, no matter how high your income goes.
Medicare tax is withheld automatically from every paycheck and shown in Box 6 of your W-2, alongside Medicare wages in Box 5 (Box 5 is typically higher than Box 1 federal taxable wages because pre-tax 401(k) contributions reduce federal taxable wages but not FICA wages). High earners also owe an Additional Medicare Tax of 0.9% once their wages exceed $200,000 for single filers (or the equivalent threshold for other filing statuses), which is withheld by the employer automatically once that threshold is crossed within a single job.
Self-employed individuals pay the full 2.9% base Medicare rate themselves as part of self-employment tax, since there is no employer to split it with, and they also owe the 0.9% Additional Medicare Tax on self-employment income above the same thresholds. That means a high-earning self-employed person's combined Medicare-related rate can reach 3.8% on income above the threshold — a common point of confusion is assuming the 0.9% additional tax is somehow separate from ordinary Medicare tax, when it is really layered directly on top of it.
Example: Medicare tax with no wage cap
An employee earns $250,000 in wages for the year. Unlike Social Security tax, the full $250,000 is subject to the base 1.45% Medicare rate, producing $3,625 in employee Medicare tax, matched by another $3,625 from the employer.
Because this employee's wages exceed the $200,000 single-filer threshold for the Additional Medicare Tax, an extra 0.9% applies to the amount above that threshold, adding to the employee's Medicare withholding on top of the uncapped 1.45% base rate.
Frequently asked questions
Is there a cap on how much Medicare tax I pay?
What is the Additional Medicare Tax and who pays it?
How much Medicare tax do self-employed people pay?
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%.