What Is Employee Medicare Tax?

Employee Medicare tax is generally withheld from an employee’s wages at 1.45% to help fund Medicare Part A, and the employer pays a separate matching 1.45%. The employee’s share is a federal payroll tax, not a premium for personal Medicare coverage, and it is separate from federal income tax and Social Security tax. Regular Medicare tax applies to all covered Medicare wages, with no annual wage cap. Employees whose wages from one employer exceed $200,000 in a calendar year may also have an additional 0.9% withheld, although the amount ultimately owed depends on total income and filing status. Knowing these rules can help explain a Medicare line on a paystub and why its amount may change during the year.

How Employee Medicare Tax Works

Employee Medicare tax is the worker’s share of the federal Hospital Insurance payroll tax. Under the standard structure, employees pay 1.45% of their Medicare wages and employers pay a matching 1.45%. The combined regular rate is 2.9%, as described in Cornell Law School’s Medicare tax overview.

The employee’s share is usually listed on a paystub as “Medicare,” “Medicare Tax,” “Medicare EE,” or a similar label. It is not a charge for enrolling in Medicare or a payment set aside for the employee’s individual medical bills. Instead, it is a payroll tax that helps fund the Medicare program.

How Is Regular Medicare Tax Calculated?

For most employees, the regular calculation is straightforward:

Employee Medicare tax withheld = Medicare wages × 1.45%

For example, if an employee has $1,000 in Medicare wages in a pay period, the employee’s share is $1,000 × 0.0145, or $14.50. The employer generally contributes another $14.50. That employer contribution is a payroll cost, not an additional deduction from the employee’s pay.

The IRS withholding-rate guidance confirms the standard 1.45% employee rate and 1.45% employer rate. Medicare wages generally include compensation subject to Medicare tax, so the amount used for this calculation may differ from taxable wages shown elsewhere on a paystub.

Why Does Regular Medicare Tax Have No Wage Cap?

Regular Medicare tax applies to all covered earnings during the year. Unlike Social Security tax, it does not stop once an employee reaches an annual wage limit. An employee therefore continues to pay the regular 1.45% rate on Medicare wages even after total earnings exceed the Social Security wage base.

The Social Security Administration’s 2026 fact sheet states that the Medicare Hospital Insurance tax is 1.45% on all earnings. This is why a raise or bonus can increase Medicare withholding even when Social Security withholding has stopped for the year.

When Does Additional Medicare Tax Apply?

Some employees also owe Additional Medicare Tax at a rate of 0.9%. This tax is paid by the employee and is not matched by the employer. For payroll withholding, an employer must begin withholding the extra 0.9% after it pays an employee more than $200,000 in wages during the calendar year. The IRS guidance on Additional Medicare Tax explains this employer withholding rule.

The $200,000 payroll trigger does not determine every employee’s final tax liability. It applies separately to wages paid by each employer and does not account for a worker’s filing status, income from another job, or a spouse’s income. The amount ultimately owed is determined using the applicable threshold for the employee’s tax filing status and relevant earned income. For example, the Social Security Administration identifies a $200,000 threshold for individuals and a $250,000 threshold for married couples filing jointly.

This difference can lead to either too little or more than enough withholding. If an employee receives $220,000 in wages split between two employers, neither employer may reach the $200,000 withholding trigger. The employee may still owe Additional Medicare Tax when filing a return. In contrast, an employee who earns $210,000 from one employer may have the extra tax withheld even if the employee is married filing jointly and the couple’s applicable threshold is higher. The withholding rule and the final tax calculation answer different questions: what an employer must deduct during the year and what the taxpayer owes based on the full filing circumstances.

Example of Additional Medicare Tax Withholding

Suppose an employee earns $202,500 in Medicare wages from one employer during a calendar year. The employer generally withholds the additional 0.9% on the $2,500 above the $200,000 trigger. On that portion, regular Medicare tax is $36.25 and Additional Medicare Tax is $22.50, for total Medicare-related withholding of $58.75. The additional 0.9% is added to the regular 1.45% rate; it does not replace it.

How Does Medicare Tax Differ from Social Security Tax?

Medicare and Social Security are both payroll taxes, which is why they are often discussed together. For many employees, the combined employee rate for the two regular taxes is 7.65%: 1.45% for Medicare and 6.2% for Social Security. This combined figure does not include the possible 0.9% Additional Medicare Tax.

The main difference is how the taxes apply to wages. Regular Medicare tax has no annual wage cap, while Social Security tax applies only up to its annual wage limit. Additional Medicare Tax may apply to higher earners. These differences can make the two paystub deductions change in different ways after a raise or bonus. For a broader comparison of payroll and income-tax withholding, see how FICA differs from federal income tax.

Do Medicare Tax Rates Change In 2026?

For 2026, the standard Medicare payroll tax remains 1.45% for employees and 1.45% for employers. The additional 0.9% tax also remains in place for wages subject to it. The Tax Foundation’s payroll-tax analysis describes the regular combined Medicare rate as 2.9% and explains the additional rate for higher earners.

What Should Employees Check on a Paystub?

Check that a Medicare deduction appears under a recognizable label and compare the employee withholding with roughly 1.45% of Medicare wages. If the year-to-date wages paid by one employer exceed $200,000, the paystub may also show the additional 0.9% withholding. Bonuses, commissions, and back pay can affect the year-to-date totals used for withholding.

If a deduction seems unexpected, payroll can explain how it was calculated and which wages were included. Employees with multiple jobs or income that may affect their filing-status threshold should distinguish the amount withheld by an employer from the total tax that may be due when filing. Federal income tax withholding is a separate paystub item; see how federal income tax withholding works for more detail.

*This article is for general informational purposes only and is not legal advice.