Medicare Tax

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The Medicare Tax and Why You Pay It

- Who pays the Medicare tax?

- What are the Medicare tax rates?

- What is the Additional Medicare Tax?

The Medicare tax is a payroll tax that applies to all earned income and supports your health coverage when you become eligible for Medicare. The tax is automatically deducted from your paycheck each month and is a tax on your earnings, including wages, tips, certain Railroad Retirement Tax Act (RRTA) benefits, and self-employment earnings that fall above a certain level. There is no minimum income limit, and all individuals who work in the United States must pay the Medicare tax on their earnings.

Who pays the Medicare tax?

Generally, all employees who work in the U.S. must pay the Medicare tax, regardless of the citizenship or residency status of the employee or employer. In certain limited situations, you may have to pay the Medicare tax on income earned outside of the United States (your employer should be able to confirm if this applies to you). If Medicare taxes are withheld from your paycheck in error, you should contact your employer to ask for a refund.


What are the Medicare tax rates?

The Medicare tax rate is determined by the IRS and is subject to change. The Federal Insurance Contributions Act, or FICA, tax rate for earned income is 7.65% in 2022, which consists of the Social Security tax (6.2%) and the Medicare tax (1.45%). The Medicare tax is one of the federal taxes withheld from your paycheck if you’re an employee or that you are responsible for paying yourself if you are self-employed.

If you are self-employed, you’ll pay a higher tax rate, since you’ll be responsible for paying both the employee portion and the share that is normally paid by your employer. Visit or contact Social Security for the current self-employment tax rate by calling 1-800-772-1213 (TTY 1-800-325-0778), Monday through Friday, from 7AM to 7PM in all U.S. time zones.

What is the Additional Medicare Tax?

The Affordable Care Act expanded the Medicare payroll tax to include the Additional Medicare Tax. This new Medicare tax increase requires higher wage earners to pay an additional tax (0.9%) on earned income.

All types of wages currently subject to the Medicare tax may also be subject to the Additional Medicare Tax. An individual owes Additional Medicare Tax on all cumulative wages, compensation, and self-employment income once the total amount exceeds the threshold for their filing status.

Who pays the Additional Medicare Tax?

Individuals are required to pay the Additional Medicare Tax if their individual wages, compensation, and self-employment income (combined income if married and filing a joint return) exceed certain wage base limits.

What are the wage base limits for the Additional Medicare Tax?

Here are the wage base limits for the Additional Medicare Tax as of 2022:

Filing StatusMaximum Amount
Married (filing jointly)$250,000
Married (filing separately)$125,000
Single, head of Household, or qualifying widow(er) with dependent child$200,000


Example of how the Additional Medicare Tax works

Single individuals can have a maximum income of $200,000 before they are subject to the Additional Medicare Tax. Should the cumulative income exceed that amount, they will then be required to pay the Additional Medicare Tax amount (0.9%).

All wages currently subject to the Medicare Tax are also subject to the Additional Medicare Tax. An individual owes Additional Medicare Tax on all cumulative wages, compensation, and self-employment income that exceeds the threshold for their filing status.

Income tax basics

The federal government and state and local governments set tax laws and collect taxes. They may use your taxes for schools, Social Security, defense programs, maintaining highways, and more, according to the Tax Foundation.

For more information about federal taxes, see the website. Look on your state’s official website for information about state and local taxes.

Medicare tax frequently asked questions

What is the Medicare tax? 

Also called the hospital insurance tax, the Medicare tax helps fund the Medicare program. It’s typically withheld from your taxes, according to the Internal Revenue Service.

Are Medicare premiums tax-deductible?

According to H&R Block, you might be able to deduct certain Medicare premiums in some limited situations. Ask a tax specialist to see if you qualify.

What is the Medicare employee tax?

The IRS (Internal Revenue Service) levies a federal tax to fund Medicare. The Medicare tax rate is 1.45% of your taxable income for employees. There is an “Additional Medicare Tax” that may apply if your income is more than $200,000 per year, according to the IRS.

This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.

Medicare information is everywhere. What is hard is knowing which information to trust. Because Medicareprofessionaladvisors are following the CMS regulations, you can rest assured you’re getting accurate information so you can make the right decisions for your coverage.

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Medicare Parts


Medicare Part A

Part A of Medicare covers hospitalisation. Inpatient treatment, limited time in a licenced nursing facility, limited home health care services, and hospital care are all covered under Part A.


Medicare Part B

Non-hospital medical costs such as doctor's appointments, blood tests, x-rays, diabetes testing and supplies, and outpatient hospital treatment are covered by Part B benefits. For this component of the original health insurance, you pay a monthly fee.


Medicare Part C

In a health insurance plan, Medicare Advantage or Medicare Part C normally covers all forms of health insurance coverage. Private insurance businesses that have been contracted by the CMS to provide a medicare plan as an alternative to the original health insurance plan provide it.


Medicare Part D

Medicare Part D is a prescription medication coverage option. Part D health insurance is available as a stand-alone plan from private insurance firms, with monthly rates varying from one to the next. Depending on the plan you're registered in, you'll split the cost of your prescription medicines.

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