What Is MED on a Pay Stub and How Is It Calculated?
Unravel the mystery of "MED" on your pay stub. Learn what this mandatory deduction is, how it's calculated, and its impact on your earnings.
A pay stub details an employee’s earnings and deductions for a specific pay period, showing gross pay (before deductions) and net pay (after withholdings). “MED” is a common entry, representing mandatory or voluntary contributions that reduce taxable income or cover benefits.
Understanding “MED” on Your Pay Stub
The “MED” abbreviation on your pay stub stands for Medicare tax. This federal payroll tax contributes to the Medicare program, a national health insurance system primarily benefiting individuals aged 65 or older and some younger people with specific disabilities. Both employees and their employers share responsibility for funding this program.
For employees, the Medicare tax rate is 1.45% of their gross wages. Employers also contribute an equal 1.45%, making the total Medicare tax 2.9% of wages. This mandatory contribution is deducted from every paycheck to support the Medicare program.
Calculating Your Medicare Tax
Calculating your Medicare tax is straightforward because there is no wage base limit. This means 1.45% of every dollar you earn is subject to Medicare tax. For example, if an employee earns $1,000 in gross wages, the Medicare tax withheld is $14.50 ($1,000 x 0.0145). This differs significantly from other payroll taxes, which may have an annual earnings cap.
For high-income earners, an Additional Medicare Tax may apply. This is an extra 0.9% Medicare tax on earnings that exceed certain thresholds. For single filers, this additional tax applies to wages above $200,000. For married individuals filing jointly, the threshold is $250,000, and for those married filing separately, it is $125,000.
Medicare Tax in the Context of Other Deductions
Medicare tax is part of FICA taxes, which stands for the Federal Insurance Contributions Act. FICA taxes are composed of two main components: Social Security tax and Medicare tax. Both are deducted from employee paychecks and matched by employers to fund federal programs.
Social Security tax, also known as Old-Age, Survivors, and Disability Insurance (OASDI), helps fund retirement, disability, and survivor benefits. The employee portion of Social Security tax is 6.2% of gross wages. Unlike Medicare tax, Social Security tax has an annual wage base limit, which for 2025 is $176,100. This means earnings above this amount are not subject to Social Security tax. Other common pay stub deductions include federal income tax and state income tax, where applicable.