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What Is Medicare Tax? Definition, How It Works
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do not influence our editors’ opinions or ratingsWhat Is Medicare Tax? Definition, How It Works
All employees pay 1.45% in Medicare taxes. People earning above a certain threshold may also face an additional 0.9% tax on income or a 3.8% tax on investment income.
Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
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Lead Writer
Expertise Investing basicsAlieza Durana is a former investing writer at NerdWallet. She has over a decade of journalism experience covering housing, labor, gender and public policy issues for the Eviction Lab, The Fuller Project for International Reporting, New America and Slate. Her work has appeared in USA Today, The Washington Post, The Atlantic and Harvard Business Review. She is based in St. George, Utah.
Alieza Durana is a former investing writer at NerdWallet. She has over a decade of journalism experience covering housing, labor, gender and public policy issues for the Eviction Lab, The Fuller Project for International Reporting, New America and Slate. Her work has appeared in USA Today, The Washington Post, The Atlantic and Harvard Business Review. She is based in St. George, Utah. Lead Writer + more + more
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12 years of experience Expertise Brokerage accounts stock market cryptocurrencyChris Davis is a Managing Editor on the Investing team. As a writer, he covered the stock market, investing strategies and investment accounts, and as a spokesperson, he appeared on NBC Bay Area and was quoted in Forbes, Apartment Therapy, Martha Stewart and Lifewire, among others. His work has appeared in The Associated Press, The Washington Post, MSN, Yahoo Finance, MarketWatch, Newsday and TheStreet.
Chris Davis is a Managing Editor on the Investing team. As a writer, he covered the stock market, investing strategies and investment accounts, and as a spokesperson, he appeared on NBC Bay Area and was quoted in Forbes, Apartment Therapy, Martha Stewart and Lifewire, among others. His work has appeared in The Associated Press, The Washington Post, MSN, Yahoo Finance, MarketWatch, Newsday and TheStreet. Published in Managing Editor + more + more Nerdy takeawaysMedicare is a federal health insurance program, and the medicare tax funds medical, hospital and hospice care.
The Medicare tax is a mandatory payroll tax.
Medicare surtaxes may apply to high-earning individuals and families.
What is the Medicare tax?
What is the Medicare tax?On July 30, 1965, President Lyndon B. Johnson signed Medicare into law to help cover healthcare costs after age 65, as well as for people with disabilities and certain illnesses. The Medicare tax, which is a type of payroll tax, funds medical, hospital and hospice care for these groups.
On July 30, 1965, President Lyndon B. Johnson signed Medicare into law to help cover healthcare costs after age 65, as well as for people with disabilities and certain illnesses. The Medicare tax, which is a type of payroll tax, funds medical, hospital and hospice care for these groups.What is the Medicare tax rate?
What is the Medicare tax rate?The Medicare tax rate for 2026 is 2.9% and is split between employees and their employer, with each paying 1.45%. It’s a mandatory payroll tax applied to earned income and wages, and comes out of your paycheck just like Social Security tax. Employers who don’t pay face a penalty.
The Medicare tax rate for 2026 is 2.9% and is split between employees and their employer, with each paying 1.45%. It’s a mandatory payroll tax applied to earned income and wages, and comes out of your paycheck just like Social Security tax . Employers who don’t pay face a penalty.If you’re self-employed, you’ll be responsible for paying both the employer and employee contributions, totaling 2.9%. The good news is that you can likely deduct half of your total self-employment tax when you file your return.
If you’re self-employed, you’ll be responsible for paying both the employer and employee contributions, totaling 2.9%. The good news is that you can likely deduct half of your total self-employment tax when you file your return. AD Get reliable back tax relief with our team of A+ rated tax professionals Trusted & Top-Rated Nationwide — 4.9★ Google rating. Learn moreon Priority Tax Relief's website
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What are the Medicare surtaxes?
What are the Medicare surtaxes?A surtax is an additional tax certain people are subject to on top of an existing tax. The Affordable Care Act created two Medicare surtaxes on high earners to fund additional services: the additional Medicare tax and the net investment income tax.
A surtax is an additional tax certain people are subject to on top of an existing tax. The Affordable Care Act created two Medicare surtaxes on high earners to fund additional services: the additional Medicare tax and the net investment income tax.Additional Medicare tax
Additional Medicare taxThe additional Medicare tax, also known as the “high earners tax,” is a 0.9% tax on income above $200,000 for individuals or $250,000 for married couples filing jointly.
The additional Medicare tax, also known as the “high earners tax,” is a 0.9% tax on income above $200,000 for individuals or $250,000 for married couples filing jointly.Net investment income tax
Net investment income taxA 3.8% net investment income tax (NIIT) may apply to investment income, which includes capital gains, dividends, annuity distributions, royalties, rent and interest. The income eligibility threshold varies based on your tax filing status, says Colleen Carcone, a Certified Financial Planner and the Director of Wealth Planning Strategies for TIAA in Boston.
A 3.8% net investment income tax (NIIT) may apply to investment income, which includes capital gains , dividends, annuity distributions, royalties, rent and interest. The income eligibility threshold varies based on your tax filing status, says Colleen Carcone, a Certified Financial Planner and the Director of Wealth Planning Strategies for TIAA in Boston.“Partnering with an advisor to create a more customized portfolio that considers tax efficiency can help to reduce your exposure to that net investment income tax,” says Carcone.
“Partnering with an advisor to create a more customized portfolio that considers tax efficiency can help to reduce your exposure to that net investment income tax,” says Carcone.The full list of income threshold amounts for Medicare surtaxes are below
The full list of income threshold amounts for Medicare surtaxes are below Internal Revenue Service. Find out if Net Investment Income Tax applies to you. Accessed Jan 23, 2026. :Filing Status
Filing Status
Filing StatusThreshold Amount
Threshold Amount
Threshold AmountHead of household (with a qualifying person)
Head of household (with a qualifying person)$200,000
$200,000Married filing jointly
Married filing jointly$250,000
$250,000Married filing separately
Married filing separately$125,000
$125,000Single
Single$200,000
$200,000Qualifying widow(er) with dependent child
Qualifying widow(er) with dependent child$250,000
$250,000Related
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