What Is Medicare Tax on a Paycheck?
By Onoir Studio LimitedPublished Source links reviewed
Medicare tax is the hospital-insurance portion of FICA. Most covered employees see it withheld from each paycheck, often under a label such as MED, MEDI or HI. It is separate from a health-insurance premium and from federal income-tax withholding.
Key takeaways
- IRS Publication 15 lists the 2026 employee Medicare rate as 1.45% of covered wages, with a matching 1.45% employer share.
- Unlike Social Security tax, regular Medicare tax has no annual wage-base limit.
- An additional 0.9% employee tax may apply above filing-status thresholds.
- An employer starts Additional Medicare withholding after it pays one employee more than $200,000 in Medicare wages during the calendar year, regardless of filing status.
- Form W-2 box 5 reports Medicare wages and tips; box 6 reports Medicare tax withheld.
The regular Medicare tax calculation
For wages paid in 2026, IRS Publication 15 states that the Medicare rate is 1.45% for the employee and 1.45% for the employer. The employer withholds the employee share and generally pays an equal employer share separately. The combined rate is 2.9%, but only the employee portion appears as a reduction in the employee’s net pay.
The IRS also states that Medicare tax has no wage-base limit. Regular Medicare withholding therefore generally continues after Social Security withholding stops at the Social Security wage base. Rates cited here were current on August 29, 2026; later official guidance and exceptions for particular workers or payments can affect treatment.
| Covered Medicare wages for the paycheck | $5,000.00 |
|---|---|
| Employee rate | 1.45% |
| Employee Medicare tax withheld | $72.50 |
| Employer share paid separately | $72.50 |
The calculation is $5,000 × 0.0145 = $72.50. The employer share does not normally reduce the employee’s paycheck.
What counts as Medicare wages
Medicare wages are not always identical to gross pay or federal income-tax wages. IRS rules include most employee wages and taxable fringe benefits, subject to specific exclusions. A traditional 401(k) salary deferral generally remains in Medicare wages even though it is excluded from current federal income-tax wages. Qualified health benefits under a section 125 cafeteria plan may be excluded when the applicable requirements are met.
That distinction explains why multiplying the gross-pay headline by 1.45% does not always reproduce the pay-stub amount. Use the Medicare taxable-wages line for the current pay period, if shown. On the annual W-2, compare box 5 with box 6.
How Additional Medicare Tax works
The Additional Medicare Tax rate is 0.9%. IRS guidance lists the liability thresholds as $250,000 for married filing jointly, $125,000 for married filing separately, and $200,000 for single, head of household and qualifying surviving spouse. Wages, Railroad Retirement Tax Act compensation and self-employment income can interact in the final calculation.
Payroll withholding follows a simpler employer rule. An employer begins withholding the additional 0.9% in the pay period when wages it has paid that employee exceed $200,000 for the calendar year and continues for the rest of the year. The employer does this without considering the employee’s filing status or spouse’s wages. There is no employer match for the additional 0.9%.
| Regular employee Medicare tax on $5,000 | $72.50 |
|---|---|
| Additional Medicare withholding on $5,000 | $45.00 |
| Total employee Medicare withholding on that portion | $117.50 |
This table isolates wages above the employer trigger. A real paycheck can include wages below and above the trigger, so payroll may apply the additional rate to only part of that check.
Why Additional Medicare withholding may not equal the final tax
A married couple filing jointly might each earn less than $200,000 from separate employers, so neither employer withholds the additional amount even though combined income exceeds the $250,000 joint threshold. The reverse can occur when a married person filing jointly earns above $200,000 but the couple remains below $250,000; the employer still follows its $200,000 withholding trigger.
Form 8959 reconciles Additional Medicare Tax liability with the amount withheld. Excess withholding may contribute to a refund, while insufficient withholding may leave tax due. A W-4 can request additional federal income-tax withholding, but the employer cannot use a W-4 to switch off required Additional Medicare withholding.
How to check the line on your pay stub
- Identify Medicare taxable wages, not medical-insurance premiums.
- Multiply covered wages by 1.45% for a basic check.
- If year-to-date wages crossed $200,000 with that employer, isolate the amount above the trigger and test the additional 0.9%.
- Review pretax benefits and taxable fringe benefits if wages do not match gross pay.
- Compare annual W-2 boxes 5 and 6 and use Form 8959 when required.
Where this comes from
- IRS Publication 15 (2026): Social Security and Medicare taxes (opens in a new tab)
- IRS Topic 751: withholding rates and 2026 wage base (opens in a new tab)
- IRS: Additional Medicare Tax questions and answers (opens in a new tab)
- IRS Instructions for Form 8959 (opens in a new tab)
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