Medicare Tax Rates
Medicare's payroll tax is the federal government's primary funding mechanism for Medicare Part A (hospital insurance). Unlike the Social Security portion of FICA, it has no wage cap — every dollar of wages is taxable at the base rate, from the first dollar through the last. Employees pay 1.45%, employers match with another 1.45%, and self-employed individuals pay the combined 2.9% rate through their self-employment tax return. Higher earners face an additional layer: once wages, compensation, or self-employment income cross a filing-status-based threshold, an extra 0.9% Additional Medicare Tax kicks in — and employers don't match this one. The thresholds ($200,000 for single filers, $250,000 for married filing jointly) have been frozen since the ACA introduced the surtax in 2013, meaning more households cross them every year through ordinary wage growth without any Congressional action.
Current Law (2026)
Medicare payroll taxes fund the Hospital Insurance side of Medicare and apply without a wage cap.
| Parameter | 2026 Value |
|---|---|
| Employee HI rate | 1.45% |
| Employer HI rate | 1.45% |
| Self-employment HI rate | 2.9% |
| Additional Medicare Tax rate | 0.9% |
Additional Medicare threshold (Single) | $200,000 |
Additional Medicare threshold (MFJ) | $250,000 |
Additional Medicare threshold (MFS) | $125,000 |
Legal Authority
- 26 U.S.C. § 3101 - Employee-side Social Security and Medicare tax rates, including the Additional Medicare Tax rule in
§ 3101(b)(2) - 26 U.S.C. § 3111 - Employer-side Medicare tax rate
- 26 U.S.C. § 1401 - Self-employment tax rates, including the Medicare component
Implementing Regulations
- 26 C.F.R. § 31.3101-1 - Employee tax
- 26 C.F.R. § 31.3111-1 - Employer tax
- 26 C.F.R. § 31.3102-1 - Collection of employee tax by employer
- IRS Form 8959 instructions and IRS Additional Medicare Tax guidance are operationally important: In practice, current IRS form instructions and withholding guidance are the main implementation materials taxpayers use to calculate and reconcile Additional Medicare Tax liability
How It Works
No wage cap: The base 1.45% employee and 1.45% employer rate applies to every dollar of Medicare wages — there's no ceiling like the Social Security wage base ($176,100 in 2026). Whether you earn $50,000 or $5,000,000, every dollar is taxed.
The Additional Medicare Tax is employee-only: Employers must begin withholding the extra 0.9% once an employee's wages from that employer exceed $200,000 in the calendar year. But employers do not match it — unlike the base rate, there's no employer share of the surtax. This means the employee bears the full 0.9%.
Here's the practical wrinkle about the $200,000 withholding trigger vs. your actual filing status. Your employer withholds the Additional Medicare Tax based on your wages from that job alone, using the $200,000 threshold — regardless of whether you file jointly, separately, or have other jobs. If you're married filing jointly, the actual threshold is $250,000 of combined household wages. If your employer withholds AMT at $200,000 but your actual MFJ threshold isn't crossed, you'll get a refund at tax time. If you and your spouse both earn $150,000 each — neither triggers withholding, but your combined $300,000 MFJ exceeds the $250,000 threshold — you'll owe $450 at filing that was never withheld.
Self-employment income: Self-employed individuals include Medicare tax in their self-employment tax calculation on Schedule SE. Both the base 2.9% and the 0.9% additional tax are reported on the return using Form 8959 when applicable. Estimated tax payments should account for both.
The thresholds are not indexed for inflation: The $200,000 (single), $250,000 (MFJ), and $125,000 (MFS) thresholds have been frozen since 2013 when the ACA introduced the Additional Medicare Tax. At 3% annual wage growth, the median household exposed to the MFJ threshold effectively shifts every year. Congress would need to change the statute to index them.
NIIT is related but legally separate: The 3.8% Net Investment Income Tax uses the same income thresholds as the Additional Medicare Tax and is also tied to Medicare financing — but it applies to investment income, not wages, and is a separate statutory tax under IRC § 1411. High earners with both wages and investment income could owe both the 0.9% AMT (on excess wages) and the 3.8% NIIT (on net investment income above the threshold).
How It Affects You
If you're a W-2 employee earning over $200,000: Your employer is withholding the additional 0.9% AMT from your paycheck starting at dollar $200,001. Whether that's too much or too little depends on your filing status. If you're single with one job, it's likely right. If you're married with two incomes, run the math: add both salaries and compare to $250,000. If combined income is $260,000 but neither employer triggered withholding, you'll owe $90 at filing — small but easy to miss. Use the IRS withholding estimator at irs.gov mid-year to check.
If you're self-employed: You're paying 2.9% base Medicare tax on all your net self-employment income, plus an additional 0.9% on the portion above your filing-status threshold. For a single filer with $250,000 in self-employment income, that's 2.9% on all $250,000 ($7,250) plus 0.9% on $50,000 ($450) — a total Medicare tax burden of $7,700. Estimated tax payments should account for this; underpayment penalties apply. One planning note: self-employed individuals can deduct the employer-equivalent portion (half of the 15.3% SE tax) as an above-the-line deduction, which reduces income tax but not the SE tax itself.
If you're in a two-earner household at $150,000 + $120,000: Neither of you individually crosses the $200,000 employer withholding trigger, so neither employer will withhold the AMT. But your combined income of $270,000 exceeds the $250,000 MFJ threshold by $20,000 — you owe 0.9% × $20,000 = $180 in Additional Medicare Tax that wasn't withheld. File Form 8959 with your return and pay it then, or increase withholding to cover it using a new W-4.
If you're a high earner with investment income: You face two parallel taxes: the 0.9% AMT on wages above your threshold, and the 3.8% NIIT on net investment income (dividends, capital gains, rental income, passive business income) above the same threshold. These are calculated separately and both reported at tax time. A household with $300,000 in wages and $80,000 in capital gains owes both the 0.9% AMT (on $50,000 of excess wages) and the 3.8% NIIT (on $80,000 of investment income, since wages already exceeded the $250,000 floor).
If you're monitoring Medicare policy risk: The Hospital Insurance Trust Fund that these taxes support is projected by Medicare Trustees to face insolvency by the mid-2030s under current projections. That creates significant policy pressure to either raise the tax rate, lift the income thresholds (or add a wage cap that doesn't currently exist for Social Security), or restructure benefits. Any of those changes would directly affect your payroll tax bill. PRIA tracks Medicare financing legislation as a core policy risk.
State Variations
Medicare tax is federal. States may have their own payroll taxes for disability insurance, paid family leave, or other programs, but they do not change the federal Medicare tax rates summarized here.
Pending Legislation (119th Congress)
The Medicare payroll tax rate structure itself is not frequently the direct subject of legislation, but Medicare financing is one of the most consequential policy debates of 2025–2026:
- One Big Beautiful Bill Act (OBBBA) — The omnibus reconciliation package under negotiation in the 119th Congress includes proposed Medicaid and Medicare spending cuts. While the OBBBA's focus is on benefit cuts rather than tax rate changes, its passage would alter Medicare's fiscal trajectory and reduce pressure for short-term HI tax increases. The specific provisions affecting Medicare revenues (vs. expenditures) are subject to ongoing negotiation.
- Medicare solvency proposals — The Medicare Trustees' 2025 report projects the Hospital Insurance Trust Fund faces potential insolvency in the early-to-mid 2030s. Proposals to address this include: (1) lifting the payroll tax rate from 1.45% to 1.7–2.0%; (2) applying the Additional Medicare Tax at lower thresholds; (3) extending the Medicare payroll tax to additional types of income. None of these proposals have advanced to a vote as of April 2026.
- Indexing the AMT thresholds — Several bipartisan bills have proposed indexing the $200,000/$250,000 Additional Medicare Tax thresholds for inflation, which would prevent "bracket creep" from expanding the tax's reach without a Congressional vote. These bills have not advanced.
Recent Developments
- 2026 filing season: IRS Form 8959 instructions continue to reflect the fixed Additional Medicare Tax thresholds — $200,000 (single), $250,000 (MFJ), $125,000 (MFS). The multi-employer withholding mismatch remains the most common source of AMT errors: taxpayers with multiple W-2 jobs or a mix of W-2 and self-employment income should reconcile on their return rather than assuming employer withholding is correct.
- Medicare Trustees 2025 report: The 2025 Medicare Trustees Report projects the HI Trust Fund will be depleted by 2033–2036 under intermediate assumptions, meaning Medicare payroll taxes alone would cover only about 89% of projected Part A costs after that point. This financing gap is the pressure point that makes Medicare payroll tax rates a live legislative issue, even in years where Congress takes no action.
- NIIT and AMT coordinated enforcement: IRS has increased its focus on coordinated net investment income / Additional Medicare Tax compliance for high-income taxpayers, particularly those with pass-through business income and investment income that may not be subject to withholding. Taxpayers in complex situations (partnership interests, S-corp distributions, rental income) should review their Form 8959 and 8960 calculations carefully.