What is the Medicare tax rate for 2026?

The base Medicare tax rate is 1.45% on every dollar of wages — no wage cap, unlike Social Security's $184,500 cap. Your employer matches the 1.45%, so total Medicare-funding payroll cost on your wages is 2.9%. On top of that, wages above $200,000 (single) / $250,000 (MFJ) / $125,000 (MFS) are subject to an Additional Medicare Tax of 0.9% — paid by the employee only, not matched by the employer. So your effective Medicare rate is 1.45% on the first $200K (single) and 2.35% above.

Is there a Medicare wage cap like Social Security?

No. Medicare tax applies to every dollar of wages with no upper limit. Social Security tax stops once your wages exceed $184,500 (2026 wage base), but Medicare keeps applying on every additional dollar. This is why high earners feel an effective FICA rate that grows with income — the 6.2% Social Security drops off, but Medicare 1.45% (or 2.35% above the threshold) continues forever.

Why are the $200K/$250K Additional Medicare thresholds frozen at 2013 numbers?

The Additional Medicare Tax was created by the Affordable Care Act (ACA) in 2010, effective 2013, with the thresholds explicitly NOT indexed for inflation. The drafters wanted gradual bracket creep to expand revenue over time. After 13+ years of inflation, what was originally aimed at the top ~5% of earners now hits a much wider band — by 2026, a single filer earning $200K is in the 76th-78th percentile, not the 95th. There's no indexing legislation pending. The frozen thresholds are roughly in line with NIIT's frozen $200K/$250K thresholds (also ACA-era).

Does my employer withhold the Additional Medicare Tax automatically?

Sort of. Your employer starts withholding the 0.9% Additional Medicare Tax once your YTD wages with THAT employer cross $200,000 — regardless of your filing status (the IRS doesn't tell employers your status). So a single filer earning $250K from one employer has the right amount withheld. But two cases create reconciliation surprises: (1) Two-earner MFJ couples each under $200K but combined over $250K — neither employer withholds, but you owe the 0.9% on the excess at filing. (2) MFS filers with the lower $125K threshold — your employer withholds based on the $200K trigger, so you under-withhold and owe at filing. Form 8959 reconciles all of this.

How does Medicare tax work for self-employed people?

Self-employed people pay both halves of the regular Medicare tax (employee 1.45% + 'employer' 1.45% = 2.9% total) on net SE earnings via Schedule SE. Plus the 0.9% Additional Medicare Tax on SE income above $200K single / $250K MFJ — same threshold as W-2 workers. Half of the regular 2.9% (i.e., 1.45%) is deductible as an above-the-line adjustment to income, partially offsetting the cost. The 0.9% additional tax is NOT deductible. SE workers don't get Form 8959 from a payer — you compute and remit it yourself with quarterly estimated taxes.

Can I deduct Medicare tax on my federal return?

W-2 employees: No — the 1.45% Medicare withheld from your paycheck is not deductible. The 0.9% Additional Medicare Tax is also not deductible. Self-employed: Half of the regular SE Medicare tax (the 'employer' half, 1.45%) IS deductible above-the-line as part of the deductible portion of SE tax. The Additional 0.9% is never deductible for either group.

Do tips count for Medicare tax?

Yes. Tips reported to your employer (via Form 4070 or W-2 Box 7) are subject to the full Medicare regime — both the 1.45% base and the 0.9% additional if you cross the threshold. The OBBBA 'No Tax on Tips' federal income tax deduction does NOT extend to Medicare; FICA still applies in full on every tipped dollar. Same for cash tips: technically subject to Medicare, though enforcement on unreported cash tips is uneven.

What's the difference between Medicare tax and NIIT?

Both are 'extra Medicare-funding taxes' targeting high earners, but they apply to different income. Medicare tax (1.45% + 0.9% additional) hits WAGES and self-employment income. NIIT (3.8%) hits INVESTMENT income — capital gains, dividends, interest, rental, passive business. Both use the same $200K single / $250K MFJ thresholds (frozen at 2013 levels). For high-income retirees living off investments, NIIT is the relevant tax (Medicare doesn't apply to retirement-account distributions or pension income). For working high earners, Medicare is the bigger bite.

Updated for 2026

Medicare Tax Rate

1.45% on every dollar of wages, no cap. Plus 0.9% extra above $200K (single) / $250K (MFJ) — thresholds frozen since 2013, so they catch more workers every year.

2026 Medicare Tax Key Numbers

Base Rate (employee)

1.45%

Total Rate (with employer match)

2.9%

Additional Medicare

+0.9%

Additional Threshold

$200K / $250K

Additional 0.9% applies to wages above $200K (single/HOH/MFS uses $125K) / $250K (MFJ). Thresholds set by the Affordable Care Act in 2010, NOT indexed for inflation. Self-employed pay the full 2.9% + 0.9% themselves.

Source: IRS Additional Medicare Tax Q&A · §3101 / §1401 / §3102 of the Internal Revenue Code.

What is the Medicare tax?

Medicare tax is a federal payroll tax that funds Medicare hospital insurance (Part A — the part that doesn't have a separate premium for most retirees). It's one half of , the other half being Social Security. The base rate is 1.45% on every dollar of wages, with no upper wage cap — unlike Social Security, which stops at the $184,500 wage base for 2026.

Your employer matches your 1.45%, so the total Medicare-funding payroll cost on your wages is 2.9%. From your paycheck's perspective only your half (1.45%) is deducted, but the employer-side match is part of your total compensation cost — economists generally argue it ultimately comes out of your wages too.

In 2010 the Affordable Care Act added an Additional Medicare Tax of 0.9% on high earners — wages above $200,000 single / $250,000 / $125,000 . Effective for tax year 2013 onward. Crucially, the employer does NOT match this 0.9%; the employee pays it alone. The thresholds are NOT indexed for inflation, so each year more workers cross them.

How Medicare tax is calculated

W-2 EMPLOYEES

1.Employer withholds 1.45% of every paycheck — no wage cap.
2.Once YTD wages with that employer cross $200,000, employer adds 0.9% withholding on every additional dollar.
3.At tax time, you reconcile on Form 8959 — adjusting for filing status (the $250K MFJ / $125K MFS thresholds), other employer wages, and SE income.
4.Two-earner MFJ couples often owe at filing because neither employer crossed $200K individually but combined wages exceeded $250K.

SELF-EMPLOYED

1.Pay 2.9% (both halves) of net SE earnings via Schedule SE — no wage cap.
2.Above $200K (single) / $250K (MFJ), add 0.9% Additional Medicare on Form 8959.
3.Half of the regular 2.9% (i.e., 1.45%) is deductible as an above-the-line adjustment — saves a little federal income tax. The 0.9% additional is NEVER deductible.
4.Pay quarterly via estimated tax (Form 1040-ES). Underpayment penalties apply if you owe $1,000+ at filing.

When Medicare tax surprises you

Wages over $200,000 (single) or $250,000 (MFJ)

Once your wages cross the threshold, every dollar above incurs an extra 0.9% Additional Medicare Tax — on top of the regular 1.45%. So the effective Medicare rate on your top dollars is 2.35%. Your employer starts withholding the additional 0.9% as soon as you cross $200K with that single employer (regardless of filing status), and you reconcile on Form 8959 at tax time.

Two-earner couples crossing $250K combined

Each employer only sees their own wage base. If you and your spouse each earn $150K, neither employer withholds the Additional Medicare Tax (both under $200K), but your combined wages of $300K exceed the $250K threshold by $50K → you owe $450 (0.9% × $50K) at filing. This is one of the most common Additional Medicare Tax surprises.

Self-employment income

Self-employed people pay the full 2.9% Medicare rate (both halves — no employer to match), plus 0.9% Additional Medicare on net SE earnings above the threshold. Half of the regular 2.9% is deductible as an adjustment to income; the additional 0.9% is not. SE workers report Medicare on Schedule SE plus Form 8959 for the 0.9% piece.

Bonuses, tips, RSU vests, NSO exercise, and other supplemental wages

All wage-like compensation is subject to the full 1.45% + 0.9% Medicare regime. A $300K vest in a single year owes the full 1.45% × $300K = $4,350 plus 0.9% × ($300K − $200K) = $900 if you're single — total Medicare on that vest alone: $5,250. exercise without sale is the only meaningful exception (ISO spread is not wages until disqualifying disposition).

Investment income (separate but related — NIIT)

Investment income (capital gains, dividends, interest, rental income) is NOT subject to Medicare tax — but it IS subject to the parallel 3.8% Net Investment Income Tax () above the same $200K/$250K thresholds. NIIT exists to extend Medicare-style funding to investment income. The math is similar but separate: wages get 0.9% Additional Medicare, investment income gets 3.8% NIIT.

Worked examples

Three scenarios show how Medicare tax stacks across income levels and filing situations.

EXAMPLE 1 — Single W-2 employee, $250,000 salary

Wages: $250,000
Base Medicare 1.45% × $250,000: $3,625
Additional 0.9% × ($250,000 − $200,000): +$450
Total Medicare paid by employee: $4,075
Effective Medicare rate: 1.63%
Employer separately pays 1.45% match (NOT 0.9%) = $3,625

EXAMPLE 2 — Two-earner MFJ couple, $150K + $150K = $300K combined

Combined wages: $300,000
Base Medicare 1.45% × $300,000 (each employer withholds on their half): $4,350
Withheld Additional Medicare (neither employer crossed $200K alone): $0
Owed Additional 0.9% × ($300,000 − $250,000) reconciled on Form 8959: +$450
Total Medicare paid: $4,800
Surprise bill at filing: $450

Why surprise: each employer only sees one spouse's $150K wage and never crosses the $200K trigger, so neither withholds the 0.9%. The combined $300K MFJ exceeds the $250K joint threshold by $50K, owed at filing.

EXAMPLE 3 — Single self-employed consultant, $300K net SE income

Net SE earnings: $300,000
SE Medicare tax 2.9% × $300,000: $8,700
Additional 0.9% × ($300,000 − $200,000): +$900
Total SE Medicare: $9,600
Above-the-line deduction (half of regular 2.9%): −$4,350
Net cost after federal income tax savings (24% bracket): ~$8,556

SE workers feel Medicare more than W-2 workers because they pay both halves of the base rate. The above-the-line deduction recovers some of it. The 0.9% additional on the $100K excess is never deductible.

Why the $200K/$250K thresholds never go up

The Affordable Care Act drafted the Additional Medicare Tax in 2010 with thresholds explicitly NOT indexed for inflation — a deliberate design choice to expand revenue gradually as wages rose. The same design applies to the parallel 3.8% Net Investment Income Tax (). Both were frozen at $200K single / $250K / $125K in 2013 and have stayed there ever since.

Cumulative inflation 2013-2026 is roughly 36%. If the thresholds had been indexed like federal income tax brackets, the 2026 single threshold would be approximately $272K, and approximately $340K. Because they weren't, the tax now reaches dual-income professional couples and single high earners who would not have been considered 'high earners' a decade ago. By 2026, somewhere around 7-8% of taxpayers cross at least one of these thresholds, up from roughly 2-3% when the tax took effect.

There's no pending legislation to index these. Periodic proposals to repeal the Additional Medicare Tax (mostly from Republican-controlled Congresses) have failed; periodic proposals to broaden it to lower thresholds (from Democratic-controlled Congresses) have also failed. Plan as if the thresholds remain frozen.

Medicare tax vs NIIT — the parallel structure

	Additional Medicare Tax	Net Investment Income Tax (NIIT)
Rate	0.9%	3.8%
Applies to	Wages + self-employment income	Capital gains, dividends, interest, rental, passive business
Threshold (single)	$200,000	$200,000
Threshold (MFJ)	$250,000	$250,000
Inflation-indexed?	No (frozen since 2013)	No (frozen since 2013)
Form to compute	Form 8959	Form 8960
Authority	IRC §3101(b)(2) (ACA 2010)	IRC §1411 (ACA 2010)

Both taxes were created by the Affordable Care Act in 2010 to fund Medicare and Medicaid expansion. They use the same income thresholds but apply to different types of income, so a high earner with both wages and investments can owe both — Additional Medicare on the wages, on the investment income. There is no double taxation: each dollar of income is hit by only one of the two.

Calculate your Medicare tax in context

Medicare tax doesn't show up in isolation — it stacks with federal income tax, Social Security, state income tax, and any state-specific surcharges. Run the full picture for your salary, state, and filing status.

Salary calculator (full breakdown) →FICA tax overview →Social Security wage base →Self-employment tax rate →1099 / SE tax calculator →Capital gains + NIIT calculator →2026 contribution limits →