What is the Medicare Tax Threshold?

The Medicare tax threshold is an important consideration for employees, self-employed workers, married couples, and higher-income taxpayers.

Unlike Social Security tax, regular Medicare tax has no wage base limit, so Medicare tax generally continues to apply to covered wages regardless of how much a person earns.

Higher-income taxpayers may also be subject to the Additional Medicare Tax, which adds another 0.9% to certain wages and self-employment income above specific income thresholds.

What Is Medicare Tax?

Medicare tax is a federal payroll tax that helps fund Medicare.

The regular Medicare tax rate is 1.45% for employees and 1.45% for employers, for a combined rate of 2.9%.

Unlike Social Security tax, there is no wage limit for regular Medicare tax.

Medicare Tax Rate

An employee earning $100,000 in Medicare wages would generally have $1,450 withheld for the employee portion of Medicare tax.

The employer generally contributes another $1,450.

Is There a Medicare Tax Wage Limit?

No.

There is no wage base limit for the regular Medicare tax.

This is different from Social Security tax, which has an annual wage base limit.

For 2026, the Social Security wage base is $184,500, while Medicare tax continues to apply to all covered wages.

Example: An employee earns $250,000 during 2026. Medicare tax generally applies to the entire $250,000, not just the first $184,500.

What Is the Additional Medicare Tax?

The Additional Medicare Tax is an extra 0.9% tax that can apply to Medicare wages, railroad retirement compensation, and self-employment income above certain thresholds.

The thresholds are:

These thresholds are not adjusted annually for inflation.

Additional Medicare Tax Rate

The Additional Medicare Tax rate is 0.9%.

The employee or taxpayer pays it.

There is no employer matching portion for the Additional Medicare Tax.

Example: A single employee has $225,000 in Medicare wages.

The amount above the $200,000 threshold is:

$225,000 − $200,000 = $25,000

The Additional Medicare Tax is:

$25,000 × 0.9% = $225

The $225 is in addition to the regular Medicare tax.

Medicare Tax for Married Couples

Married couples filing jointly have a $250,000 threshold for the Additional Medicare Tax.

The combined income of both spouses is used to determine the couple’s Additional Medicare Tax liability.

Example: One spouse earns $150,000, and the other earns $175,000.

Combined wages are:

$150,000 + $175,000 = $325,000

The amount above the $250,000 threshold is:

$325,000 − $250,000 = $75,000

The Additional Medicare Tax would be:

$75,000 × 0.9% = $675

Medicare Tax for Married Filing Separately

The threshold is considerably lower for married taxpayers who file separate returns.

For 2026, the threshold is $125,000.

Example: A married taxpayer filing separately has $150,000 of applicable wages.

The amount above the threshold is:

$150,000 − $125,000 = $25,000

The Additional Medicare Tax would be:

$25,000 × 0.9% = $225

When Does an Employer Withhold Additional Medicare Tax?

Employers must generally begin withholding the Additional Medicare Tax when an employee’s wages from that employer exceed $200,000 during the calendar year.

The employer withholding threshold is $200,000 regardless of the employee’s filing status.

This can be confusing because the taxpayer’s actual filing threshold may be $250,000 or $125,000 depending on filing status.

Why Is the Employer Threshold $200,000?

The $200,000 amount is an employer withholding threshold.

An employer generally looks only at the wages it pays to an individual employee.

The employer generally does not combine that employee’s wages with wages earned by a spouse.

Example: A married couple each earns $150,000.

Their combined wages are $300,000, which exceeds the $250,000 married-filing-jointly threshold.

However, neither spouse individually earns more than $200,000 from an employer.

Therefore, the employers generally would not be required to withhold the Additional Medicare Tax based solely on those wages.

The couple could still owe Additional Medicare Tax when filing their joint return.

Can Additional Medicare Tax Be Withheld Even If You Do Not Owe It?

Yes.

A married couple can have Additional Medicare Tax withheld during the year even though their final joint tax return shows that they do not owe the tax.

Example: One spouse earns $220,000, and the other earns $20,000.

The first spouse’s employer must generally withhold the additional 0.9% on wages above $200,000.

Combined wages are only $240,000, which is below the $250,000 threshold for married filing jointly.

The couple may therefore have excess Additional Medicare Tax withholding that can be credited on the joint federal tax return.

Medicare Tax and Multiple Jobs

Having more than one employer can create another situation involving the Additional Medicare Tax.

Each employer generally considers only the wages it pays to the employee when determining when the $200,000 withholding threshold is reached.

Employers generally do not combine wages paid by other employers.

Example: A single taxpayer earns $150,000 from one employer and $100,000 from another.

Total wages are $250,000.

Neither employer individually paid more than $200,000, so neither employer may have withheld the Additional Medicare Tax.

However, the taxpayer’s total wages exceed the $200,000 threshold by $50,000.

The taxpayer could therefore owe:

$50,000 × 0.9% = $450

Medicare Tax and Self-Employment Income

Self-employed taxpayers can also be subject to the Additional Medicare Tax.

Self-employment income is considered along with Medicare wages when determining whether the applicable threshold has been exceeded.

The calculation can be more complicated when a taxpayer has both wages and self-employment income.

Example: Wages Plus Self-Employment Income

Suppose a single taxpayer has:

• $130,000 in wages
• $145,000 in self-employment income

The single-filer threshold is $200,000.

The taxpayer’s $130,000 of wages leaves:

$200,000 − $130,000 = $70,000

of threshold available for the self-employment income calculation.

The amount of self-employment income above that remaining threshold may be subject to the Additional Medicare Tax.

Medicare Tax vs. Social Security Tax

Medicare and Social Security taxes are both payroll taxes, but they operate differently.

The Social Security wage base changes annually.

There is no wage base limit for regular Medicare tax.

Does Medicare Tax Apply to Retirement Income?

Regular Medicare payroll tax generally applies to wages and certain self-employment income rather than ordinary retirement income.

Traditional 401(k) distributions and traditional IRA withdrawals generally are not subject to regular Medicare payroll tax.

However, retirement income can affect other federal taxes and Medicare-related costs.

Does Medicare Tax Apply to Social Security?

Social Security benefits themselves are generally not subject to Medicare payroll tax.

However, Social Security benefits can be taxable for federal income tax purposes depending on the taxpayer’s overall income.

Federal income tax on Social Security is separate from Medicare payroll taxes.

Does Medicare Tax Apply to Pension Income?

Pension payments generally are not subject to regular Medicare payroll tax.

However, taxable pension income can increase a taxpayer’s overall income.

This can affect other taxes, including how Social Security benefits are taxed.

Do 401(k) Distributions Affect Medicare Tax?

Traditional 401(k) distributions generally are not subject to the regular 1.45% Medicare payroll tax.

However, a large 401(k) distribution can increase modified adjusted gross income and potentially affect Medicare premiums in future years.

This is separate from Medicare payroll tax.

Medicare Tax and Medicare Premiums Are Different

Medicare payroll taxes should not be confused with Medicare premiums.

Medicare payroll tax is generally withheld from wages.

Medicare premiums are amounts paid by Medicare beneficiaries for certain Medicare coverage.

Higher-income Medicare beneficiaries may also have to pay income-related adjustments to Medicare premiums.

A large retirement distribution can potentially affect those premiums even though the distribution itself is not subject to Medicare payroll tax.

Medicare Tax and the Net Investment Income Tax

Higher-income taxpayers may also encounter the Net Investment Income Tax, commonly called NIIT.

The NIIT is generally 3.8% on certain investment income when applicable income thresholds are exceeded.

The Net Investment Income Tax is separate from the Additional Medicare Tax.

Although the two taxes can combine to a 3.8% rate in some circumstances, they are calculated under different rules.

Medicare Tax for Seniors

Turning age 65 does not eliminate Medicare payroll taxes from wages.

A senior who continues working generally continues to pay Medicare tax on covered wages.

If wages exceed the applicable threshold, the Additional Medicare Tax may also apply.

Medicare Tax on Part-Time Work

Many retirees continue working after beginning Social Security or Medicare.

Part-time wages are generally subject to Medicare tax just like other covered wages.

A retiree receiving Social Security and pension income can therefore still have Medicare taxes withheld from employment wages.

Medicare Tax Withholding on Your Paycheck

Medicare tax is generally shown separately on an employee’s pay statement.

The regular Medicare withholding is generally calculated at 1.45% of covered Medicare wages.

Once wages paid by an employer exceed $200,000 during the calendar year, the employer generally begins withholding the additional 0.9%.

Form 8959

Form 8959 is used to calculate the Additional Medicare Tax.

Taxpayers may need the form when their Medicare wages, self-employment income, or railroad retirement compensation exceed the applicable threshold.

The form also helps account for Additional Medicare Tax already withheld during the year.

Can You Get a Refund of Excess Medicare Tax Withholding?

Yes, in some circumstances.

For example, a married couple may have Additional Medicare Tax withheld because one spouse earned more than $200,000 from an employer.

If the couple’s combined income is below the $250,000 married-filing-jointly threshold, some or all of the withholding may be credited on the joint tax return.

Medicare Tax Withholding and Two Employers

When someone has two employers, neither employer generally knows the wages paid by the other employer.

This means Additional Medicare Tax may not be withheld during the year even when the taxpayer ultimately owes it.

Taxpayers in this situation may need to account for the additional tax when making estimated tax payments or adjusting withholding.

Medicare Tax and Bonuses

Bonuses are generally included in wages for Medicare tax purposes.

If an employee’s year-to-date wages have already exceeded $200,000, the employer generally must withhold the additional 0.9% Medicare tax on wages above that threshold.

Example: Large Year-End Bonus

An employee has already earned $190,000 during 2026.

The employer then pays a $50,000 bonus.

The employee’s total wages become $240,000.

The employer generally withholds Additional Medicare Tax on the $40,000 that exceeds the $200,000 employer withholding threshold.

The additional withholding would be:

$40,000 × 0.9% = $360

Medicare Tax and Tax Planning

Higher-income employees should monitor their wages throughout the year.

This is especially important for taxpayers with multiple jobs, bonuses, self-employment income, or significant compensation.

Understanding the Medicare tax thresholds can help taxpayers anticipate their final tax liability.

Common Medicare Tax Mistakes

One common mistake is assuming Medicare tax stops when Social Security tax stops.

It does not.

Another mistake is confusing the $200,000 employer withholding threshold with the taxpayer’s actual filing-status threshold.

Other common mistakes include:

• Forgetting about self-employment income
• Not considering a spouse’s wages
• Confusing Medicare tax with Medicare premiums
• Confusing Additional Medicare Tax with the Net Investment Income Tax
• Assuming retirement income is subject to Medicare payroll tax
• Forgetting about income from a second employer

Medicare Tax Thresholds at a Glance

The Additional Medicare Tax rate is 0.9%.

The regular Medicare tax rate is 1.45% for employees and 1.45% for employers.

Medicare Tax Example for a High-Income Employee

Suppose a single employee earns $300,000 in Medicare wages during 2026.

Regular Medicare tax:

$300,000 × 1.45% = $4,350

Additional Medicare Tax:

$300,000 − $200,000 = $100,000

$100,000 × 0.9% = $900

The employee’s total Medicare-related employee tax would therefore be $5,250.

The regular Medicare tax has an employer matching component, but the employer does not match the 0.9% Additional Medicare Tax.

Medicare Tax Example for a Married Couple

Suppose a married couple filing jointly has $400,000 of combined Medicare wages.

Regular Medicare tax for the employees:

$400,000 × 1.45% = $5,800

Additional Medicare Tax:

$400,000 − $250,000 = $150,000

$150,000 × 0.9% = $1,350

The couple’s total employee Medicare-related taxes would therefore be $7,150.

Medicare Tax and Federal Tax Brackets

Medicare tax is separate from federal income tax.

A taxpayer can have a high federal income tax bracket while also paying Medicare tax on wages.

The Additional Medicare Tax is also separate from the regular federal income tax brackets.

Medicare Tax and Social Security Benefits

Medicare payroll taxes and Social Security income taxes are two different concepts.

Workers pay Medicare tax on covered wages.

Retirees may pay federal income tax on part of their Social Security benefits depending on their overall income.

A retiree can therefore have Medicare-related payroll taxes during employment and federal income taxes on Social Security during retirement.

Electronic Filing Recommendation 💻

Electronic filing can make it easier to report wages, self-employment income, and Additional Medicare Tax.

Tax software can use information from W-2 forms and other tax documents to help determine whether Form 8959 is required.

Electronic filing can provide:

• Faster processing
• Improved filing accuracy
• Automatic tax calculations
• Direct deposit availability
• Faster filing confirmation
• Easier recordkeeping

Taxpayers with multiple jobs or self-employment income should review their Medicare wages carefully before filing.

Frequently Asked Questions

What is the Medicare tax threshold for 2026?

The Additional Medicare Tax threshold is $200,000 for single taxpayers and most other filing statuses, $250,000 for married couples filing jointly, and $125,000 for married taxpayers filing separately.

What is the regular Medicare tax rate?

The regular Medicare tax rate is 1.45% for employees and 1.45% for employers.

Is there a Medicare wage limit?

No. There is no wage base limit for regular Medicare tax.

What is the Additional Medicare Tax?

It is an additional 0.9% tax that can apply to Medicare wages, self-employment income, and certain railroad retirement compensation above the applicable threshold.

When does an employer start withholding the Additional Medicare Tax?

An employer generally begins withholding the additional 0.9% when an employee’s wages from that employer exceed $200,000 during the calendar year.

Is the $200,000 threshold the same as the filing threshold?

No. The $200,000 amount is the employer withholding threshold. The taxpayer’s actual liability depends on filing status and applicable income.

Does Medicare tax apply to all wages?

Generally, covered wages are subject to regular Medicare tax, although certain exceptions exist.

Does Medicare tax apply to 401(k) distributions?

Traditional 401(k) distributions generally are not subject to regular Medicare payroll tax.

Does Medicare tax apply to Social Security?

Social Security benefits generally are not subject to Medicare payroll tax.

Does Medicare tax stop at age 65?

No. Covered wages generally remain subject to Medicare tax regardless of age.

What form is used for Additional Medicare Tax?

Form 8959 is used to calculate Additional Medicare Tax.

Bottom Line

The regular Medicare tax rate for 2026 is 1.45% for employees and 1.45% for employers. Unlike Social Security tax, there is no wage base limit for regular Medicare tax.

Higher-income taxpayers may also owe the 0.9% Additional Medicare Tax.

The Additional Medicare Tax thresholds are $200,000 for single taxpayers and most other filing statuses, $250,000 for married couples filing jointly, and $125,000 for married taxpayers filing separately.

One of the most important distinctions is between the $200,000 employer withholding threshold and the taxpayer’s actual filing threshold.

An employer generally begins withholding the additional 0.9% once an individual’s wages from that employer exceed $200,000, even when the taxpayer ultimately does not owe the Additional Medicare Tax.

Medicare tax is also different from Medicare premiums and from the federal income tax on Social Security benefits.

Understanding these distinctions is particularly important for high-income employees, married couples with two incomes, people with multiple jobs, self-employed workers, and seniors who continue working.