what is the medicare tax rate
What Is the Medicare Tax Rate in 2025? (1.45%, 2.9%, and 3.8%)
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Meta Title: What Is the Medicare Tax Rate in 2025? (1.45%, 2.9%, and 3.8%)
Meta Description: Medicare tax rates are 1.45% for employees, 2.9% for self-employed, and 3.8% on investment income over thresholds. Learn 2025 rates and calculations.
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H1
What Is the Medicare Tax Rate in 2025?
ANSWER SECTION
The Medicare tax rate depends on your employment status and income level. For 2025, the standard rate is 1.45% for employees (with employers matching for a total of 2.9%), 2.9% for self-employed individuals, and an additional 0.9% for high earners making over $200,000 (single) or $250,000 (married filing jointly). High earners may also face a 3.8% Medicare surtax on net investment income. Unlike Social Security tax, there is no wage cap on Medicare tax—all wages are subject to it.
H2: Standard Medicare Tax Rates (2025)
Employee Medicare Tax:
| Taxpayer Type | Employee Pays | Employer Pays | Total |
|---|---|---|---|
| W-2 Employee | 1.45% | 1.45% | 2.9% |
| Self-Employed | 2.9% | N/A | 2.9% |
Key Points:
- Applies to ALL wages with no cap
- Withheld from every paycheck
- Employer matches employee contribution
- Self-employed pay both portions (deductible as business expense)
Example:
- Employee earning $100,000
- Employee Medicare tax: $1,450
- Employer Medicare tax: $1,450
- Total Medicare contribution: $2,900
H2: Additional Medicare Tax for High Earners (0.9%)
When the Extra Tax Applies:
The Additional Medicare Tax of 0.9% applies to wages above:
| Filing Status | Threshold |
|---|---|
| Single | $200,000 |
| Married Filing Jointly | $250,000 |
| Married Filing Separately | $125,000 |
| Head of Household | $200,000 |
How It Works:
- Only applies to wages ABOVE the threshold
- Employee pays entire 0.9% (no employer match)
- Withholding starts when wages exceed $200,000 (regardless of filing status)
- Reported on Form 8959
Calculation Examples:
Example 1: Single earner $250,000
- Regular Medicare: $250,000 × 1.45% = $3,625
- Additional Medicare: ($250,000 - $200,000) × 0.9% = $450
- Total Medicare tax: $4,075
Example 2: Married filing jointly, combined $280,000
- Each spouse earns $140,000
- Neither has withholding over $200,000
- No automatic withholding of additional tax
- May owe additional tax when filing return
- Additional Medicare due: ($280,000 - $250,000) × 0.9% = $270
H2: Net Investment Income Tax (3.8% Medicare Surtax)
The Third Medicare Rate:
High earners also pay a 3.8% Net Investment Income Tax (NIIT) on investment income when modified AGI exceeds:
| Filing Status | Threshold |
|---|---|
| Single | $200,000 |
| Married Filing Jointly | $250,000 |
| Married Filing Separately | $125,000 |
| Head of Household | $200,000 |
What Counts as Net Investment Income:
- Interest and dividends
- Capital gains
- Rental income
- Royalty income
- Passive business income
- Non-qualified annuity distributions
What Doesn't Count:
- Wages and self-employment income
- Social Security benefits
- Tax-exempt interest
- Distributions from retirement accounts
Calculation:
- Pay 3.8% on the LESSER of:
- Net investment income, OR
- Modified AGI minus the threshold
Example:
- Single taxpayer: $220,000 wages + $50,000 capital gains
- Modified AGI: $270,000
- Threshold: $200,000
- Excess MAGI: $70,000
- Net investment income: $50,000
- NIIT applies to: $50,000 (lesser amount)
- Tax: $50,000 × 3.8% = $1,900
H2: Medicare Tax on Your Paycheck
Form W-2 Reporting:
Box 5 (Medicare Wages and Tips):
- Shows wages subject to Medicare tax
- Usually same as Box 1 (with minor exceptions)
- No maximum limit
Box 6 (Medicare Tax Withheld):
- Shows only the employee portion (1.45% or 1.45% + 0.9%)
- Does not show employer match
Example W-2 (High Earner):
Box 5 (Medicare wages): $220,000.00
Box 6 (Medicare tax withheld): $3,770.00
Calculation:
- Regular Medicare: $220,000 × 1.45% = $3,190
- Additional Medicare: $20,000 × 0.9% = $180
- Total withheld: $3,370
H2: Self-Employed Medicare Tax
Schedule SE Calculation:
Self-employed individuals pay Medicare tax through Self-Employment (SE) Tax:
SE Tax Components (2025):
- Social Security: 12.4% (up to wage base of $176,100)
- Medicare: 2.9% (no limit)
- Additional Medicare: 0.9% (over thresholds)
Deductible Portion:
- Can deduct the "employer" half (1.45%) as business expense
- Deducted on Schedule 1, Line 15
- Reduces income tax but not self-employment tax
Example:
- Self-employment income: $150,000
- SE tax calculation:
- Medicare portion: $150,000 × 92.35% × 2.9% = $4,018
- Deductible: $2,009 (half)
H2: Related Tax Questions
For a comprehensive explanation of how Medicare tax works and funds the program, see our guide on what is Medicare tax covering FICA breakdown.
Learn about whether Medicare premiums are deductible in our guide on are Medicare premiums tax deductible with itemized deduction rules.
Understand another type of income tax in our guide on SDI tax covering state disability insurance programs.
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