1. What is Medicare Tax?

Medicare tax is a payroll tax that funds the Medicare health insurance program. It consists of a basic 1.45% tax on all wages plus an additional 0.9% tax for high-income earners.

2. How is Medicare Tax Calculated?

The standard Medicare tax calculation:

All wage earners pay this 1.45% tax on their earnings, with employers matching this amount for employees.

3. Additional Medicare Tax

High-income earners pay an additional 0.9% on income above these thresholds:

• $200,000 for single filers
• $250,000 for married filing jointly

Example: A single filer earning $250,000 would pay 1.45% on all earnings plus 0.9% on the $50,000 above the threshold.

4. Using the Calculator

Instructions: Enter your total income and select your filing status. The calculator will compute both the standard Medicare tax and any additional tax if applicable.

5. Frequently Asked Questions (FAQ)

Q1: Is Medicare tax the same as Social Security tax?
A: No, they are separate payroll taxes. Social Security tax is 6.2% on income up to the wage base limit.

Q2: Do self-employed individuals pay more?
A: Yes, they pay both employee and employer portions (2.9% total), plus the additional 0.9% if applicable.

Q3: Are there any exemptions?
A: Some religious groups may be exempt, but most wage earners must pay Medicare tax.

Q4: How is investment income taxed?
A: Investment income may be subject to the 3.8% Net Investment Income Tax but not regular Medicare tax.

Q5: When is the additional tax withheld?
A: Employers must withhold it once wages exceed $200,000, regardless of filing status.