Medicare Tax Explained: 1.45% + 0.9% Additional Tax
Medicare Tax Explained: How It Works in 2025
Medicare tax is the smaller of the two FICA taxes, but it has no wage cap — meaning it applies to every dollar you earn, and high earners pay an extra 0.9% surtax.
Medicare Tax Rates 2025
| Component | Rate | Who Pays |
|---|---|---|
| Base Medicare tax | 1.45% | Employee |
| Employer Medicare match | 1.45% | Employer |
| Additional Medicare Tax | 0.9% | Employee only (high earners) |
| Self-employed base rate | 2.9% | Self-employed (both sides) |
Medicare Tax vs. Social Security Tax: Key Differences
| Social Security Tax | Medicare Tax | |
|---|---|---|
| 2025 employee rate | 6.2% | 1.45% |
| Wage cap | $176,100 | No cap |
| Extra surtax | None | 0.9% above $200K (single) |
| Self-employed rate | 12.4% | 2.9% |
How Much Medicare Tax You Pay by Salary
| Annual Salary | Medicare Tax (1.45%) | Add’l Medicare | Total Medicare |
|---|---|---|---|
| $50,000 | $725 | $0 | $725 |
| $100,000 | $1,450 | $0 | $1,450 |
| $150,000 | $2,175 | $0 | $2,175 |
| $200,000 | $2,900 | $0 | $2,900 |
| $201,000 | $2,914.50 | $9 | $2,923.50 |
| $250,000 | $3,625 | $450 | $4,075 |
| $300,000 | $4,350 | $900 | $5,250 |
| $500,000 | $7,250 | $2,700 | $9,950 |
Additional Medicare Tax Thresholds
| Filing Status | Income Threshold | Rate Above Threshold |
|---|---|---|
| Single | $200,000 | 0.9% |
| Married Filing Jointly | $250,000 | 0.9% |
| Married Filing Separately | $125,000 | 0.9% |
| Head of Household | $200,000 | 0.9% |
Important: The Additional Medicare Tax applies to the lesser-known income types too — not just wages:
- W-2 wages above threshold
- Self-employment income above threshold
- Certain railroad retirement income
It does NOT apply to investment income (capital gains, dividends) — those are subject to the Net Investment Income Tax (NIIT), a separate 3.8% surtax.
Net Investment Income Tax (NIIT)
High earners also face the 3.8% Net Investment Income Tax on investment income when their total income exceeds the threshold:
| Filing Status | NIIT Threshold |
|---|---|
| Single | $200,000 MAGI |
| Married Filing Jointly | $250,000 MAGI |
NIIT applies to: dividends, capital gains, rental income, royalties, passive business income — not wages.
Self-Employed Medicare Tax
Self-employed individuals pay the full 2.9% Medicare rate:
- First: Pay 2.9% on 92.35% of net self-employment income
- If income above threshold: Add 0.9% Additional Medicare Tax
- Deduction: Deduct the “employer” half (1.45%) as an adjustment to gross income
Example: $250,000 self-employment income
- Medicare base: $250,000 × 92.35% × 2.9% = $6,727
- Additional Medicare Tax: ($250,000 − $200,000) × 0.9% = $450
- Total Medicare tax: $7,177
What Medicare Tax Funds
Medicare payroll taxes fund Medicare Part A (hospital insurance). Part A covers inpatient hospital stays, skilled nursing facility care, some home health care, and hospice.
Workers generally earn Medicare eligibility (premium-free Part A) after 40 quarters of Medicare-covered employment. You are building this entitlement with every paycheck.
Use our Paycheck Calculator to see your exact Medicare withholding.
See Also
Related guides
Social Security and Medicare Tax Rates 2026: FICA Complete Guide
FICA taxes take 7.65% from every paycheck — 6.2% Social Security + 1.45% Medicare. See 2026 wage base, employer match, and how to minimize your FICA burden legally.
Social Security Tax 2025: Rate, Wage Base, and What You Pay
Social Security tax in 2025: 6.2% employee rate, 6.2% employer rate, $176,100 wage base. How it's calculated and what it funds.
Social Security Tax Calculator: How FICA Works and What You Actually Pay
Understand exactly how Social Security tax works: the 6.2% rate, the $176,100 wage base for 2026, when it stops each year, self-employment SE tax, and how to check your earnings record.
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