What Percent of Your Paycheck Goes to Medicare?

Medicare tax is a mandatory payroll deduction contributing to the federal government’s Medicare program. This program provides health insurance primarily for individuals aged 65 or older, and also for certain younger people with disabilities. The tax ensures a funding source for hospital insurance (Part A) benefits, which cover inpatient hospital stays, skilled nursing facility care, hospice care, and some home health services. This deduction from your paycheck is a direct contribution to this social insurance program.

Understanding the Standard Medicare Tax Rate

The standard Medicare tax rate is 1.45% of all earned income, with no income limit. Your employer also pays a matching 1.45% portion, bringing the total Medicare tax rate to 2.9% of your gross wages.

When you review your pay stub, you will typically only see your 1.45% employee share deducted. The employer’s matching contribution is a separate payroll expense for the business and is not reflected as a deduction from your paycheck. There is no wage base limit for Medicare tax, unlike Social Security tax which has an annual wage base limit.

Additional Medicare Tax for Higher Earners

Some individuals with higher incomes are subject to an Additional Medicare Tax of 0.9%. This tax applies to earned income above specific thresholds, which vary by filing status. For single filers, the threshold is $200,000, while for married individuals filing jointly, it is $250,000.

This 0.9% additional tax is solely the employee’s responsibility; employers do not match this portion. For example, a single filer earning $250,000 pays the additional 0.9% tax on the $50,000 above the $200,000 threshold. Income above these thresholds is taxed at a combined Medicare rate of 2.35% (1.45% standard + 0.9% additional).

Medicare Tax for the Self-Employed

Self-employed individuals are responsible for paying both the employee and employer portions of the Medicare tax, totaling 2.9% on their net earnings from self-employment. This obligation is part of the Self-Employment Tax (SE Tax), which also includes Social Security tax.

The Medicare portion of the self-employment tax has no income limit. Self-employed individuals may also be subject to the 0.9% Additional Medicare Tax if their self-employment income exceeds the same thresholds as employees ($200,000 for single filers, $250,000 for married filing jointly). When calculating adjusted gross income, self-employed individuals can deduct one-half of their total Self-Employment Tax.

Locating Medicare Tax on Your Pay Stub

Locating your Medicare tax deduction on a pay stub is simple. Look for a line item labeled “Medicare,” “Med,” or “Med Tax” in the deductions section of your pay statement. This line will display the specific amount withheld from that particular paycheck for Medicare.

To verify the accuracy of the deduction, you can calculate 1.45% of your gross pay for that period. This calculated amount should match the figure listed for Medicare on your pay stub. If there is a significant discrepancy, it may warrant a review with your employer’s payroll department to ensure correct withholding.