Your employer withholds 1.45% of every dollar of your gross wages for Medicare tax, with no income cap. Once your year-to-date wages from that employer pass $200,000, an extra 0.9% comes out of everything above that line, so the amount of Medicare tax withheld from your paycheck rises to 2.35% on the higher earnings. Your employer matches the 1.45% base rate from its own funds but does not match the 0.9% surcharge.1Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates2Internal Revenue Service. Topic No. 560, Additional Medicare Tax
The 1.45% Base Rate
Every W-2 employee pays 1.45% of gross wages toward Medicare. The employer pays a matching 1.45%, for a combined 2.9% flowing to the IRS on every paycheck.1Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates You only see your half on your pay stub, but the employer’s half is real money the government collects on your wages.
Medicare tax differs from Social Security tax in one important way: there’s no wage base. Social Security withholding stops for the year once your earnings pass its cap ($184,500 in 2026), but Medicare keeps applying to every dollar.1Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates Whether you earn $30,000 or $3 million, the 1.45% keeps coming out.
A quick paycheck example: on $4,000 of gross biweekly pay, Medicare withholding is $4,000 × 0.0145, or $58.00. The employer sends another $58.00 on top of that. Across 26 pay periods at the same rate, you’d see $1,508 in Medicare tax withheld for the year.
The Extra 0.9% Once You Cross $200,000
When your year-to-date wages from a single employer exceed $200,000, that employer must start withholding an additional 0.9% on everything above the $200,000 line.3Internal Revenue Service. Questions and Answers for the Additional Medicare Tax Your rate on those higher dollars becomes 2.35%. The employer doesn’t match the surcharge, so the total Medicare tax on that slice of income is 3.8% rather than 2.9%.2Internal Revenue Service. Topic No. 560, Additional Medicare Tax
The $200,000 withholding trigger is the same regardless of your filing status. Your employer doesn’t know whether you’re married, whether your spouse works, or what other jobs you hold, so the law uses a flat line. The actual thresholds that determine what you owe on your return, however, depend on how you file:
- Single or Head of Household: $200,000
- Married Filing Jointly: $250,000 (combined household wages and self-employment income)
- Married Filing Separately: $125,000
- Qualifying Surviving Spouse: $200,000
None of these thresholds are indexed for inflation, so they don’t shift year to year.4Internal Revenue Service. Instructions for Form 8959, Additional Medicare Tax
Why Your Paycheck Withholding Might Not Match What You Owe
The gap between the flat $200,000 withholding trigger and the filing-status thresholds creates two common surprises.
Over-withholding: a married couple filing jointly doesn’t owe Additional Medicare Tax until combined income tops $250,000. But if one spouse earns $210,000 at a single job, that employer withholds the extra 0.9% on the $10,000 above $200,000 anyway.
Under-withholding: if each spouse earns $150,000 at separate jobs, neither employer withholds the surcharge because no individual crossed $200,000. Yet the household’s $300,000 sits $50,000 above the $250,000 joint threshold, and the couple owes the 0.9% on that $50,000 at filing.4Internal Revenue Service. Instructions for Form 8959, Additional Medicare Tax Couples filing separately face the lowest threshold ($125,000) and can also see an unexpected balance due.
Fixing the Difference on Form 8959
You reconcile with the IRS on Form 8959, attached to your 1040. It calculates your real Additional Medicare Tax liability using your filing status and total Medicare wages, then compares that to what your employer withheld. Too much withheld becomes a credit against your total tax; too little means you owe the difference.3Internal Revenue Service. Questions and Answers for the Additional Medicare Tax You cannot ask your employer to stop the withholding once you’ve hit $200,000; the fix happens on the annual return.5Internal Revenue Service. 2025 Instructions for Form 8959, Additional Medicare Tax
Which Wages the Tax Applies To
Medicare tax hits almost every form of cash compensation: regular pay, hourly wages, commissions, bonuses, severance, accrued vacation payouts, and reported tips. Taxable fringe benefits count too. Employer-provided group-term life insurance above $50,000 in coverage generates imputed income that’s added to your Medicare wages even though no cash reaches you.6Office of the Law Revision Counsel. 26 USC 79, Group-Term Life Insurance Purchased for Employees
Deductions That Lower the Base
Salary-reduction contributions through a Section 125 cafeteria plan are generally excluded from both income tax and FICA wages.7Internal Revenue Service. FAQs for Government Entities Regarding Cafeteria Plans Pre-tax premiums for employer health, dental, and vision coverage reduce the wages your Medicare tax is calculated on. Contributions to an HSA or FSA made through a cafeteria plan do the same, skipping both income tax and employment taxes.8Internal Revenue Service. Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans
Deductions That Don’t
Traditional 401(k), 403(b), and 457(b) contributions escape federal income tax but not Medicare tax.9Internal Revenue Service. 401(k) Plan Overview That’s why Box 5 (Medicare wages) on your W-2 is often bigger than Box 1 (federal taxable wages): retirement deferrals cut Box 1 but leave Box 5 alone.10Internal Revenue Service. Publication 15 (2026), Employer’s Tax Guide
Checking the Numbers on Your W-2
Two boxes on your W-2 tell the Medicare story. Box 5 shows your total Medicare wages and tips, the base your employer used. Box 6 shows the total Medicare tax withheld for the year, including any Additional Medicare Tax.11Internal Revenue Service. General Instructions for Forms W-2 and W-3 (2026) A quick check: if you didn’t cross $200,000, Box 6 should equal Box 5 × 0.0145. If you did, Box 6 will be higher because the 0.9% surcharge was layered on top for wages above the trigger.
If You Also Have Self-Employment Income
Paycheck withholding doesn’t cover self-employment. If you work for yourself, you pay the full 2.9% Medicare portion yourself under the Self-Employment Contributions Act, computed on Schedule SE and paid through quarterly estimated payments rather than paycheck deductions.12Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) The Additional Medicare Tax also reaches self-employment income above your filing-status threshold, and Form 8959 handles the reconciliation when you have both wages and self-employment earnings.3Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
Don’t Confuse It With the Net Investment Income Tax
The 3.8% Net Investment Income Tax uses the same $200,000 / $250,000 thresholds as the Additional Medicare Tax and took effect the same year, which is why people mix them up. The NIIT applies to investment income — interest, dividends, capital gains, rental income — not to wages, and it isn’t withheld from your paycheck.13Internal Revenue Service. Net Investment Income Tax You can owe both in the same year, but never on the same dollar.