High earners pay an additional 0.9% Medicare tax on income above certain thresholds. Many people don't know about this tax or how it works. Understanding the additional Medicare tax helps you plan for it and avoid surprises. This guide explains everything about the additional Medicare tax.
Table of Contents
- What Is Additional Medicare Tax?
- Additional Medicare Tax Rate
- Income Thresholds
- How Additional Medicare Tax Is Calculated
- Withholding on Additional Medicare Tax
- Self-Employed and Additional Medicare Tax
- Common Additional Medicare Tax Scenarios
- Mistakes to Avoid
- Frequently Asked Questions
- Bottom Line: Master Additional Medicare Tax
What Is Additional Medicare Tax?
Definition
Additional Medicare tax:
- 0.9% on income above thresholds
- Only employee pays (employer doesn't match)
- In addition to regular 1.45% Medicare tax
- Total Medicare: 1.45% + 0.9% = 2.35% for high earners
Purpose: Helps fund Medicare program.
When It Applies
Applies when:
- Wages exceed $200,000 (single) or $250,000 (married filing jointly)
- Only on amount above threshold
This is extra: On top of regular 1.45% Medicare tax.
Additional Medicare Tax Rate
The 0.9% Rate
Additional Medicare tax: 0.9%
- On income above thresholds
- Only employee pays (employer doesn't match)
- In addition to regular 1.45%
Total for high earners: 2.35% (1.45% + 0.9%).
Combined Medicare Tax
For high earners:
- Regular Medicare: 1.45% on all wages
- Additional Medicare: 0.9% on income above threshold
- Total: 2.35% on income above threshold
Example:
- $250,000 salary (single)
- Regular: $250,000 × 1.45% = $3,625
- Additional: $50,000 × 0.9% = $450
- Total: $4,075
Income Thresholds
2026 Thresholds
Thresholds:
- Single: $200,000
- Married filing jointly: $250,000
- Married filing separately: $125,000
- Head of household: $200,000
Above threshold: Pay additional 0.9% on excess.
How Thresholds Work
Example (single):
- $250,000 salary
- Threshold: $200,000
- Additional tax on: $50,000
- Additional tax: $50,000 × 0.9% = $450
Only excess: Is subject to additional tax.
How Additional Medicare Tax Is Calculated
Per Paycheck
Each paycheck:
- If wages exceed threshold: Additional 0.9% on excess
- Withheld by employer
- May not be enough if you have other income
Example:
- $15,000/month salary = $180,000/year (below threshold, no additional tax)
- $20,000/month salary = $240,000/year (above threshold, additional tax on $40,000)
Annual Calculation
At tax time:
- Calculate total income (wages + other income)
- Apply threshold
- Calculate additional tax on excess
- Compare to withholding
- Owe or get refund
Important: Based on total income, not just wages.
Withholding on Additional Medicare Tax
Employer Withholding
Employer withholds:
- Additional Medicare tax if wages exceed threshold
- Based on wages only (may not account for other income)
- May not be enough if you have other income
This can cause: Under-withholding.
If Under-Withheld
If withholding isn't enough:
- You'll owe at tax time
- May need to make estimated payments
- Plan accordingly
This is common: If you have other income (investment income, etc.).
Self-Employed and Additional Medicare Tax
Self-Employed Pay Additional Tax
Self-employed pay:
- Regular Medicare: 2.9% (both shares)
- Additional Medicare: 0.9% on income above threshold
- Total: 3.8% on income above threshold
This is significant: Self-employed pay more.
How It Works for Self-Employed
Calculate:
- Net earnings from self-employment
- Apply threshold
- Pay additional 0.9% on excess
- Pay with estimated taxes
This is part: Of self-employment tax.
Common Additional Medicare Tax Scenarios
Scenario 1: Just Above Threshold (Single)
Situation: $210,000 salary (single)
Additional Medicare tax:
- Threshold: $200,000
- Excess: $10,000
- Additional tax: $10,000 × 0.9% = $90
Total Medicare: Regular $3,045 + Additional $90 = $3,135.
Scenario 2: Well Above Threshold (Single)
Situation: $300,000 salary (single)
Additional Medicare tax:
- Threshold: $200,000
- Excess: $100,000
- Additional tax: $100,000 × 0.9% = $900
Total Medicare: Regular $4,350 + Additional $900 = $5,250.
Scenario 3: Married Filing Jointly
Situation: $300,000 combined salary (married)
Additional Medicare tax:
- Threshold: $250,000
- Excess: $50,000
- Additional tax: $50,000 × 0.9% = $450
Total Medicare: Regular $4,350 + Additional $450 = $4,800.
Scenario 4: Wages + Other Income
Situation: $180,000 wages + $30,000 investment income = $210,000 total
Additional Medicare tax:
- Total income: $210,000 (above $200,000 threshold)
- Additional tax on: $10,000
- Additional tax: $10,000 × 0.9% = $90
But: Employer only withholds on wages (may not withhold enough).
You'll owe: $90 at tax time (if not withheld).
Mistakes to Avoid
Mistake 1: Not Knowing About Additional Tax
Problem: Don't know about additional Medicare tax, surprised by higher tax.
Fix: Understand additional Medicare tax for high earners.
Mistake 2: Not Planning for Additional Tax
Problem: High earner, don't plan for additional tax, owe at tax time.
Fix: Understand additional tax, plan for it, adjust withholding or make estimated payments.
Mistake 3: Not Accounting for Other Income
Problem: Wages below threshold, but other income pushes total above, don't plan for additional tax.
Fix: Calculate total income (wages + other), plan for additional tax if total exceeds threshold.
Frequently Asked Questions
What Is Additional Medicare Tax?
0.9% on income above $200,000 (single) / $250,000 (married). Only employee pays (employer doesn't match).
When Do I Pay Additional Medicare Tax?
When total income (wages + other income) exceeds $200,000 (single) / $250,000 (married).
Do I Pay Additional Medicare Tax on All Income?
No: Only on income above the threshold. Regular 1.45% applies to all income, additional 0.9% only on excess.
Will My Employer Withhold Additional Medicare Tax?
If wages exceed threshold: Yes, employer withholds. But if you have other income, withholding may not be enough.
Do Self-Employed Pay Additional Medicare Tax?
Yes: Self-employed pay 0.9% additional on income above threshold (in addition to regular 2.9%).
Bottom Line: Master Additional Medicare Tax
High earners pay additional 0.9% Medicare tax on income above thresholds. Understanding it helps you plan and avoid surprises.
Key Takeaways:
- Rate is 0.9%—on income above thresholds
- Thresholds are $200,000—(single) / $250,000 (married)
- Only employee pays—employer doesn't match additional tax
- Based on total income—wages + other income
- May need estimated payments—if withholding isn't enough
Action Steps:
- Understand: Additional Medicare tax (0.9% on income above thresholds)
- Know: Thresholds ($200,000 single / $250,000 married)
- Calculate: Total income (wages + other) to see if you exceed threshold
- Plan: For additional tax, adjust withholding or make estimated payments
- Check: Withholding to ensure it's adequate
Remember: Additional Medicare tax affects high earners. Understand the thresholds, calculate your total income, and plan for the additional tax.
Next Steps:
- Understand additional Medicare tax
- Know the thresholds
- Calculate if you exceed threshold
- Plan for additional tax
- Read our guide: "Medicare Tax Basics"
- Learn about: "How Benefits Reduce Taxable Income"
- Adjust withholding or make estimated payments if needed
Don't be surprised by additional Medicare tax. Understand the thresholds, calculate your total income, and plan for it.