Medicare Tax Calculator
Calculate your Medicare tax liability with our comprehensive calculator covering both regular Medicare tax and Additional Medicare Tax for high earners. Medicare tax is a mandatory federal payroll tax funding the Medicare healthcare program, with all workers paying 1.45% of wages (matched by employers for a total 2.9%). High-income earners pay an Additional Medicare Tax of 0.9% on earnings exceeding $200,000 for single filers or $250,000 for married couples filing jointly.
Your employment status
Annual wages or net self-employment income
Affects Additional Medicare Tax threshold
Other earned income subject to Medicare tax
For married filing jointly only
What is Medicare tax and who pays it?
Medicare tax is a federal payroll tax funding Medicare healthcare program for seniors 65+ and disabled individuals. All workers pay 1.45% of wages (employers match another 1.45% for total 2.9%). Self-employed pay both portions (2.9% total). High earners pay Additional Medicare Tax: 0.9% on income exceeding $200,000 (single), $250,000 (married filing jointly), $125,000 (married filing separately). Unlike Social Security, there's NO wage cap—all income subject to Medicare tax.
What is the Additional Medicare Tax?
Extra 0.9% tax on high earners enacted under Affordable Care Act (2013). Thresholds: $200,000 single filers, $250,000 married filing jointly, $125,000 married filing separately. Applied ONLY to income exceeding threshold. Example: Single filer earning $220,000 pays 0.9% Additional Medicare Tax on $20,000 (amount over $200,000) = $180 extra. Employers must withhold when wages exceed $200,000 regardless of filing status.
How much Medicare tax do self-employed individuals pay?
Self-employed pay both employee and employer portions = 2.9% total (vs 1.45% for employees). Calculated on 92.35% of net self-employment income. Plus Additional Medicare Tax (0.9%) on income over thresholds. Example: $100,000 net self-employment income - Medicare tax: $100,000 * 0.9235 * 0.029 = $2,678. Good news: can deduct half of self-employment tax as business expense.
Is there a cap on Medicare tax like Social Security?
No, Medicare tax applies to ALL income with no maximum wage base. Social Security has cap ($160,200 for 2023), but Medicare does not. Example: earning $500,000 - Social Security tax: only on first $160,200 (6.2%) = $9,932 max, Medicare tax: on entire $500,000 (1.45%) = $7,250, Plus Additional Medicare Tax on amount over $200,000 (0.9%) = $2,700, Total Medicare: $9,950.
Do I pay Medicare tax on investment income?
Regular Medicare tax (1.45%/2.9%): NO, only on earned income (wages, salaries, self-employment). Net Investment Income Tax (NIIT): separate 3.8% surtax on investment income for high earners. NIIT applies to lesser of: net investment income OR modified AGI exceeding $200,000 (single), $250,000 (married jointly). Investment income includes: capital gains, dividends, interest, rental income, royalties.
Can I get a refund if too much Medicare tax was withheld?
Regular Medicare Tax (1.45%): generally no refund possible—you owe this regardless. Exception: if employer incorrectly withheld. Additional Medicare Tax (0.9%): yes, can get refund if over-withheld. Common scenario: Married couple each earning $150,000, employers withhold Additional Medicare Tax when each exceeds $200,000 individually, but couple threshold is $250,000 combined—they overpaid and get refund when filing jointly.
What income is subject to Medicare tax?
Subject to Medicare tax: Wages and salaries, Tips and bonuses, Commissions, Self-employment income, Severance pay, Some fringe benefits, Disability pay (if under retirement age). NOT subject: Investment income (dividends, interest, capital gains), Rental income (unless self-employed real estate professional), Retirement account distributions (401k, IRA, pensions), Social Security benefits, Child support, Workers compensation.
How is Medicare tax calculated for employees?
Regular Medicare Tax (1.45%): calculated on gross wages before any deductions. No maximum wage base (unlike Social Security). Formula: Gross Wages * 0.0145 = Medicare Tax. Employer withholds from paycheck and matches with another 1.45%. Additional Medicare Tax (0.9%): employers withhold when wages exceed $200,000 in calendar year. Example: Single employee earning $75,000 annually - Medicare tax: $75,000 * 0.0145 = $1,087.50 annually, $90.63 monthly.
Do retirees pay Medicare tax on pension or Social Security?
No, retirees do NOT pay Medicare tax on: Social Security benefits, Pension distributions, IRA/401k withdrawals, Annuity payments, Investment income. Only earned income (wages, self-employment) subject to Medicare tax. Exception: if working part-time or consulting while receiving Social Security, those earnings ARE subject to Medicare tax. Many retirees confused because they pay Medicare Part B premiums, but that's payment for insurance coverage, not Medicare tax.
What is Form 8959 and when do I need it?
Form 8959 calculates Additional Medicare Tax and reconciles withholding. File if: Your income exceeds threshold ($200k single, $250k married jointly, $125k married separately), You had Additional Medicare Tax withheld (check W-2 box 6), You're self-employed with income over threshold. Form reconciles: employer withholding vs actual tax owed based on filing status.
How does Medicare tax work for multiple jobs?
Each employer withholds Medicare tax independently (1.45%) regardless of other jobs. For Additional Medicare Tax: each employer withholds 0.9% when YOUR wages from them exceed $200,000. If two jobs each paying $150,000 (total $300,000) - Each employer withholds regular 1.45% only (neither exceeds $200k individually), You owe Additional Medicare Tax on $100,000 (excess over $200k threshold) when filing return = $900.
Will Medicare tax increase in the future?
Current rates (1.45% employee, 1.45% employer, 0.9% Additional) set by law. Changes require Congressional action. Medicare faces funding challenges: Trust fund projected depleted by 2028-2031 (varies by estimate), Aging population increasing beneficiaries, Healthcare costs rising faster than revenue. Potential changes discussed: Raising Medicare tax rates, Increasing Additional Medicare Tax thresholds or rates, Expanding Additional Medicare Tax to more income types.