The Medicare surtax on your paycheck is the Additional Medicare Tax, a 0.9% tax your employer must withhold from wages once you earn more than $200,000 in a calendar year. It sits on top of the regular 1.45% Medicare tax, so every dollar above the trigger is taxed at 2.35% on the Medicare line.1Internal Revenue Service. Topic No. 560, Additional Medicare Tax Whether you actually owe what was withheld — or owe more, or should get some back — depends on your filing status and your total household income, not on the single number your employer sees.
What the 0.9% Applies To
The tax is a flat 0.9% on Medicare wages, self-employment income, and Railroad Retirement Tax Act compensation above the threshold for your filing status.1Internal Revenue Service. Topic No. 560, Additional Medicare Tax Only the income above the line is taxed, not the whole paycheck. A single filer with $230,000 in wages owes the 0.9% on $30,000, or $270.2Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
The thresholds are set by filing status:
- Single, head of household, or qualifying surviving spouse: $200,000
- Married filing jointly: $250,000
- Married filing separately: $125,000
These numbers are written into the Internal Revenue Code as fixed dollar amounts and do not adjust for inflation.3Office of the Law Revision Counsel. 26 U.S. Code 3101 – Rate of Tax They’ve been the same since the tax took effect in 2013, which is why more earners cross them each year.
Anything that shows up in your Medicare wages counts: cash wages, tips, bonuses, commissions, and taxable non-cash fringe benefits such as group-term life insurance coverage above $50,000.2Internal Revenue Service. Questions and Answers for the Additional Medicare Tax Investment income does not. Dividends, capital gains, interest, and rental income are handled under a different tax, covered near the end of this article.
Why Your Employer Withholds at $200,000
Payroll uses one universal trigger. Your employer must begin withholding the 0.9% once your year-to-date wages from that job cross $200,000, and the rule ignores your filing status and any income your spouse earns.1Internal Revenue Service. Topic No. 560, Additional Medicare Tax Withholding starts in the pay period you cross the line and applies to every dollar of wages after that.
Unlike the standard 1.45% Medicare tax, this one has no employer match. Your employer withholds the 0.9% from your check and contributes nothing on top. Bonuses and commissions are folded into the running total. If you’ve earned $180,000 in regular wages through November and get a $50,000 year-end bonus, withholding kicks in on the $30,000 of that bonus that pushes you past $200,000.2Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
You cannot ask your employer to stop withholding once the $200,000 trigger is hit. The law requires them to continue no matter what your actual filing situation looks like.
When Payroll Withholding Doesn’t Match What You Owe
The $200,000 payroll trigger is blunt. It creates two familiar situations where paycheck withholding is wrong for the taxpayer.
You owe more than was withheld when your total household Medicare wages exceed your filing-status threshold but no single job crosses $200,000. A married couple filing jointly with each spouse earning $190,000 has zero withheld during the year, yet their combined $380,000 exceeds the $250,000 joint threshold by $130,000. That’s a $1,170 bill at filing time. Someone working two jobs — $120,000 from one and $110,000 from another — is in the same bind: neither employer withholds anything, but the taxpayer owes 0.9% on the $30,000 above their $200,000 single threshold.
You had too much withheld when your job crossed $200,000 but your filing status carries a higher threshold or your total income didn’t actually exceed the line. A married filer earning $220,000 whose spouse earns nothing had 0.9% withheld on $20,000 of wages, but the couple’s total sits below the $250,000 joint threshold, so all $180 should come back.
Married couples considering filing separately should note that the $125,000 threshold is half the joint threshold. Filing separately gives no benefit from income splitting on this tax and often makes it worse.
If you can see a shortfall coming, the fix during the year is to increase withholding on Form W-4 using Step 4(c), or to make quarterly estimated payments with Form 1040-ES.4Internal Revenue Service. Employees Withholding Certificate5Internal Revenue Service. Estimated Taxes The IRS Tax Withholding Estimator at irs.gov/W4App can size the extra amount. Fixing it in September costs less than discovering the gap in April.
Self-Employment Income and Mixed Income
Self-employed taxpayers owe the 0.9% on net self-employment earnings above the threshold for their filing status. No one withholds it, so it goes into your estimated payments. If you expect to owe $1,000 or more in total tax for the year, you generally need to make quarterly payments using Form 1040-ES.5Internal Revenue Service. Estimated Taxes
If you have both W-2 wages and self-employment income, the IRS applies a specific order. First, figure the Additional Medicare Tax on any W-2 wages above the threshold. Then reduce your threshold by your total W-2 wages, but not below zero. Finally, apply 0.9% to any self-employment income above the reduced threshold.1Internal Revenue Service. Topic No. 560, Additional Medicare Tax
A single filer with $150,000 in W-2 wages and $100,000 in net self-employment income owes nothing on the wages. But the threshold for the self-employment income drops to $50,000 ($200,000 minus $150,000 in wages), so 0.9% applies to $50,000 of self-employment income, or $450.
A self-employment loss cannot reduce the threshold or offset wages for this tax. The IRS ignores the loss when running the calculation.2Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
Reconciling on Form 8959
The reckoning happens on Form 8959, which you attach to your Form 1040. The form calculates what you actually owe based on your filing status and total income, compares it against what was withheld, and produces either a balance due or a credit.6Internal Revenue Service. Instructions for Form 8959 (2025)
If your employer withheld the 0.9% but you didn’t actually owe it, Part V of Form 8959 reconciles the excess. Any over-withholding flows to line 25c of your Form 1040, combined with your regular federal income tax withholding. Skip the form and you forfeit the refund.6Internal Revenue Service. Instructions for Form 8959 (2025)
What Happens if You Underpay
There is no special penalty attached to the Additional Medicare Tax. If you don’t pay enough during the year through withholding or estimated payments, you face the standard federal underpayment interest. The rate adjusts quarterly, and for the second quarter of 2026 it is 6%.7Internal Revenue Service. Internal Revenue Bulletin 2026-8 The charge is calculated separately for each quarter you fell short, so an early-year shortfall accrues more than a late-year one.
The 3.8% Tax on Investment Income Is a Different Tax
If you’ve heard a “Medicare surtax” figure of 3.8%, that’s a separate tax called the Net Investment Income Tax. It applies to investment income — interest, dividends, capital gains, rental income, royalties, non-qualified annuities — not to wages or self-employment income.8Internal Revenue Service. Net Investment Income Tax It uses the same filing-status thresholds and is also not indexed for inflation, but it’s calculated on Modified Adjusted Gross Income and reported on Form 8960.
The two taxes never hit the same dollar. Wages and self-employment income get the 0.9%; investment income gets the 3.8%.9Internal Revenue Service. Questions and Answers on the Net Investment Income Tax A high earner with a big salary and a large portfolio can owe both in the same year, on different pools of income.