What Is Medicare Tax?
Quick Answer
Medicare tax is 1.45% of your gross wages with no income cap, and your employer pays a matching 1.45%. Combined, 2.9% of your wages fund Medicare. If you earn more than $200,000 (single) or $250,000 (married filing jointly), you also pay an Additional Medicare Tax of 0.9% on wages above those thresholds. Medicare tax is part of FICA and is withheld from every paycheck automatically.
How Medicare Tax Works
Medicare tax is the second component of FICA, alongside Social Security tax. The key difference is that Medicare has no wage cap — every dollar you earn is subject to the 1.45% tax.
2025 Medicare Tax Rates
| Category | Rate | Applies To |
|---|---|---|
| Employee | 1.45% | All wages |
| Employer | 1.45% | All wages |
| Combined | 2.9% | All wages |
| Additional Medicare Tax | 0.9% | Wages above $200,000 (single) |
The Additional Medicare Tax is paid only by the employee — employers do not match it. Learn more about when it applies.
Real Example With Actual Numbers
Sophia earns $85,000 in California and is paid semimonthly (24 paychecks per year).
| Detail | Annual | Per Paycheck |
|---|---|---|
| Gross pay | $85,000 | $3,541.67 |
| Medicare tax (1.45%) | $1,232.50 | $51.35 |
| Employer match (1.45%) | $1,232.50 | $51.35 |
| Total Medicare funding | $2,465.00 | $102.71 |
Sophia's $51.35 per paycheck goes toward Medicare along with her employer's match. She does not hit the $200,000 threshold, so no Additional Medicare Tax applies.
Now consider Miguel, who earns $250,000. His Medicare tax:
- 1.45% on all $250,000 = $3,625.00
- Additional 0.9% on $50,000 ($250,000 - $200,000) = $450.00
- Total Medicare tax: $4,075.00
Use the SalaryHog calculator to see your exact Medicare withholding.
Medicare Tax vs Social Security Tax
| Feature | Medicare | Social Security |
|---|---|---|
| Employee rate | 1.45% | 6.2% |
| Wage cap | None | $176,100 (2025) |
| Additional surcharge | 0.9% above $200K | None |
| What it funds | Hospital insurance | Retirement, disability, survivors |
Because Social Security caps at $176,100 while Medicare continues on all earnings, very high earners pay a larger share of their FICA in Medicare relative to Social Security.
Medicare Tax for Self-Employed
Self-employed workers pay both the employee and employer portions — the full 2.9% on net self-employment income. The Additional Medicare Tax of 0.9% also applies to self-employment income above $200,000. Half of the 2.9% base Medicare tax is deductible as an above-the-line adjustment to AGI.
See how self-employment taxes compare to W-2 employment with the freelance calculator or read the 1099 vs W-2 comparison.
Can You Reduce Medicare Tax?
There is almost nothing you can do to reduce Medicare tax on wages. Unlike federal income tax, contributions to a 401(k), traditional IRA, or the standard deduction do not lower your Medicare tax. The only payroll deductions that reduce Medicare tax are those made through a Section 125 cafeteria plan, such as FSA and employer-sponsored HSA contributions.
Check your pay stub to see Medicare tax listed separately from Social Security and federal income tax, or run your full breakdown at the SalaryHog calculator.