W-2 Box 5 — Medicare wages and tips
Your wages subject to Medicare tax. Unlike Social Security, there is no wage base cap — Box 5 can exceed Box 3 on high salaries.
At a glance — Box 5
- Box name
- Medicare wages and tips
- Reports to
- Not reported on 1040 directly.
- Check against
- Gross wages minus Section 125 pre-tax deductions and pre-tax HSA contributions — not minus 401(k)/403(b)/457(b) deferrals. Box 5 should match Box 3 up to the Social Security wage base and then keep rising above it, since Medicare has no cap.
What Box 5 means
Box 5 reports the wages the W-2 instructions describe as subject to Medicare tax, including tips reported. It's built the same way as Box 3 — gross pay minus pre-tax Section 125 cafeteria-plan deductions and pre-tax HSA contributions — but it is not reduced by traditional 401(k), 403(b), or 457(b) elective deferrals.
That's the same contrast that separates Box 3 from Box 1, and it's worth stating explicitly because it's the most common W-2 question after Box 12: a traditional 401(k) deferral lowers your federal taxable wages (Box 1) but not your FICA wages (Boxes 3 and 5), so Box 5, like Box 3, is routinely higher than Box 1 for anyone deferring into a traditional retirement plan. Section 125 premiums are the deduction that reduces all three boxes the same way, because they come out before either income tax or FICA is calculated. Roth 401(k)/403(b) contributions (codes AA/BB) are after-tax, so they're already counted in Box 1, Box 3, and Box 5 alike.
The difference between Box 3 and Box 5 shows up only at the top of the income range. Medicare tax has no wage base — there is no cap analogous to the Social Security wage base that limits Box 3. So Box 5 tracks Box 3 exactly up through the Social Security wage base, then keeps climbing on its own for anyone earning above it, while Box 3 stays flat.
Box 5 also determines whether your employer had to withhold the 0.9% Additional Medicare Tax. Under IRC §3101(b)(2), once Box 5 wages from a single employer pass $200,000 in a calendar year, that employer must withhold the extra 0.9% on the excess — regardless of your actual filing status or what any other employer paid you. Employer-paid health insurance premiums, by contrast, are never wages for any purpose and never appear in Box 5 at all.
Tax return implications
- Used to verify that Box 6 was withheld correctly: 1.45% of Box 5, plus 0.9% on the portion of Box 5 above $200,000 at this employer.
- Feeds Form 8959, where your Additional Medicare Tax liability is finally reconciled against your actual filing-status threshold rather than the flat $200,000 per-employer withholding trigger.
- Unlike Box 3 plus Box 7, Box 5 does not build Social Security retirement, disability, or survivor benefits — Medicare tax funds Medicare Part A (Hospital Insurance) only.
- If you have multiple employers each paying you under $200,000, none of them individually withholds the Additional Medicare Tax — but you may still owe it at filing if your combined wages cross your actual threshold.
- Employer-paid health, dental, and most other employer-sponsored insurance premiums are excluded from Box 5 entirely — they're never treated as wages, so there's nothing to reconcile there.
Common pitfalls & things to check
- Seeing Box 5 exceed Box 3 is normal once you're above the Social Security wage base — that's Medicare's uncapped design working as intended, not an error.
- If you earn above $200,000 at a single employer, expect the extra 0.9% withheld automatically, even if your actual filing-status threshold is higher (e.g., $250,000 MFJ) — the true liability is settled on Form 8959, potentially as a credit.
- The reverse gap is easy to miss: two employers each paying under $200,000 that combine to more than your MFJ ($250,000) or MFS ($125,000) threshold can leave you owing Additional Medicare Tax that nobody withheld.
- Don't expect employer-paid health insurance premiums to appear here — they're excluded from wages for every tax purpose, not just Box 1.
- A Box 5 far above Box 1 with no unusual deferrals is worth a second look — imputed income items like group-term life insurance over the statutory exclusion also inflate Box 5, not just retirement deferrals.
FAQ
Why is my Box 5 higher than my Box 3?
You're earning above the Social Security wage base. Box 3 caps there; Box 5 has no cap and keeps rising with your gross Medicare wages.
Why is my Box 5 higher than my Box 1?
Traditional 401(k)/403(b)/457(b) deferrals reduce Box 1 but not Box 5 — the same reason Box 3 runs higher than Box 1.
Does Box 5 include my employer's health insurance contribution?
No. Employer-paid premiums for health, dental, and most other coverage are excluded from wages entirely and never appear in Box 5.
What does Box 5 actually pay for?
Medicare Part A (Hospital Insurance). Unlike Social Security wages, Medicare wages don't factor into any retirement benefit calculation.
Related W-2 boxes
Box 6 — Medicare tax withheld
1.45% of Box 5, plus 0.9% Additional Medicare Tax on the portion of Box 5 above $200,000 at any single employer.
Box 1 — Wages, tips, other compensation
Your taxable federal wages for the year — gross pay minus pre-tax deductions like traditional 401(k), Section 125 cafeteria plan contributions, and pre-tax HSA.
Box 2 — Federal income tax withheld
Total federal income tax your employer withheld from your paychecks during the year, based on your Form W-4 elections.
Box 3 — Social security wages
Your wages subject to Social Security tax, capped at the annual wage base. Differs from Box 1 because traditional 401(k) deferrals are not excluded.
Reconciling your W-2 at tax time? Use the paycheck calculator to verify expected federal, Social Security, and Medicare withholdings on your salary, and the federal income tax calculator to estimate your refund or balance owing before you file.
Related Calculators
Paycheck Calculator
Federal, state, FICA withholding, net take-home, W-4 alignment
Federal Income Tax Calculator
10–37% brackets, $15,750 standard deduction, progressive calculation
W-4 Withholding Calculator
Form W-4 steps, correct federal withholding, avoid penalties
FICA & Social Security
6.2% SS to $176,100, 1.45% Medicare, 0.9% additional Medicare
Tax Refund Estimator
Estimate federal refund, withholding vs liability, adjustments
401(k) Calculator
Contribution limits, employer match, tax-deferred growth
Sources
W-2 box definitions per IRS General Instructions for Forms W-2 and W-3 and IRC §6051. Rates and thresholds current for tax year 2025 (file by April 15, 2026); 2026 figures included where published.