Additional Medicare Tax
Tax Glossary Term
Definition
The Additional Medicare Tax is a 0.9% surtax on earned income above certain thresholds, introduced by the Affordable Care Act in 2013. It applies to wages, compensation, and self-employment income exceeding $200,000 for single filers, $250,000 for married filing jointly, or $125,000 for married filing separately. Unlike the regular 1.5% Medicare tax, the employer does not match the Additional Medicare Tax — it is borne entirely by the employee. Your employer is required to begin withholding the 0.9% surtax once your wages from that job exceed $200,000 in a calendar year, regardless of your filing status. This means if you are married filing jointly and your spouse also works, you could be under-withheld or over-withheld depending on your combined income. Any difference is reconciled when you file your return on Form 8959. The Additional Medicare Tax also applies to self-employment income above the threshold, calculated on Schedule SE. The thresholds are not indexed for inflation, so more taxpayers become subject to this tax each year as wages rise. Combined with the regular Medicare tax, high earners pay 2.4% on wages above the threshold (1.5% + 0.9%), or 3.8% if self-employed (2.9% + 0.9%).
Example
Filing status: Single
W-2 wages: $275,000
Regular Medicare: $275,000 x 1.5% = $3,987.5
Additional Medicare: ($275,000 - $200,000) x 0.9% = $675
Total Medicare tax: $4,662.5