What is the Medicare Tax Rate for 2026?

Medicare tax is a federal payroll tax that funds Medicare Part A, the hospital insurance portion of the program. For 2026, the Medicare tax rate is 1.45% of wages for employees, matched by another 1.45% from employers, while self-employed people pay the full 2.9% themselves on 92.35% of their net self-employment profit.

Unlike Social Security tax, Medicare tax has no wage cap. Social Security tax stops once your wages pass the annual wage base, but Medicare tax applies to every dollar you earn, and high earners pay an additional surtax on top.

Medicare Tax Rate for 2026

Medicare tax is one half of FICA (Federal Insurance Contributions Act) tax. The other half is Social Security tax at 6.2%, which does stop at a wage base. Together they take 7.65% from a typical paycheck, matched by your employer for a combined 15.3%.

Medicare Tax Example

A single filer earning $250,000 in wages pays regular Medicare tax of 1.45% x $250,000 = $3,625, plus Additional Medicare Tax of 0.9% on the $50,000 above the $200,000 threshold, or $450. That’s $4,075 in total, about 1.63% of pay. The employer pays its own $3,625 but nothing toward the $450.

The Additional Medicare Tax

The Affordable Care Act added a 0.9% surtax on higher earners, effective from 2013. It applies to wages and self-employment income above:

The thresholds are not indexed for inflation. Unlike tax brackets and contribution limits, these figures have been fixed since 2013, so wage growth brings more earners above them each year.

Only the employee pays it. Employers do not match the additional 0.9%, so the surtax raises your marginal rate on wages above the threshold from 1.45% to 2.35%.

Your employer must begin withholding the surtax once your wages with that employer exceed $200,000, regardless of your filing status. Withholding can therefore be more or less than what you owe. A married couple each earning $150,000 has $300,000 in combined wages and owes the surtax on $50,000, but neither employer withholds it, so they owe at filing. A couple where one spouse earns $220,000 and the other earns nothing has $180 withheld (0.9% of the $20,000 above $200,000) but owes no surtax because the joint threshold is $250,000, so the withholding comes back as a credit. Any difference is reconciled on Form 8959.

Self-Employment and Medicare Tax

Self-employed people pay Medicare tax through SECA (the Self-Employment Contributions Act) rather than FICA, covering both halves at 2.9%. The tax applies to 92.35% of your net profit, which works out to about 2.68% of profit. The IRS calls that adjusted figure your net earnings from self-employment, and you owe self-employment tax only if it reaches $400 for the year. You can deduct the employer-equivalent half as an above-the-line adjustment, which reduces your adjusted gross income but not the self-employment tax itself.

The additional 0.9% also applies to self-employment income, but the threshold is first reduced (not below zero) by any Medicare wages you earned. A single filer with $130,000 of wages and $145,000 of self-employment income (net earnings after the 92.35% adjustment) has a reduced threshold of $70,000, so the surtax applies to $75,000 of self-employment income. The surtax itself is not deductible. Form 8959 handles the calculation.

Medicare Tax vs. the Net Investment Income Tax

Both took effect in 2013 and use the same income thresholds for most filing statuses, but they are different taxes. Only Medicare tax is dedicated to Medicare; NIIT revenue goes to the general fund.

Medicare tax applies to earned income: wages and self-employment income. The Net Investment Income Tax (NIIT) is a separate 3.8% levy on investment income, including interest, dividends, capital gains, and passive rental income, for taxpayers with modified adjusted gross income (MAGI) above $200,000 single or head of household, $250,000 married filing jointly, or $125,000 married filing separately.

A retiree living entirely on portfolio withdrawals and Social Security pays no Medicare tax at all, because none of that is earned income, but may owe NIIT on the investment portion. Someone with a $400,000 salary and no investments owes the Medicare surtax but no NIIT.

The two are measured against different things. The Additional Medicare Tax is tested against wages and self-employment income; NIIT is tested against MAGI. So a Roth conversion raises MAGI and can pull investment income into NIIT range even though the conversion is not itself investment income, while having no effect at all on the Medicare surtax. Neither threshold is indexed. Modeling how conversions, capital gains, and wage income stack in the same year in ProjectionLab’s tax analytics shows where those thresholds actually bite.

Frequently Asked Questions

What is the Medicare tax rate? 1.45% for employees, matched by employers for 2.9% total. Self-employed people pay the full 2.9% on 92.35% of net self-employment profit. High earners pay an additional 0.9% above $200,000 (single) or $250,000 (married filing jointly).

Is there a wage limit on Medicare tax? No. Medicare tax applies to all earned income with no cap. Social Security tax is the one that stops at an annual wage base.

Who pays the additional Medicare tax? Employees and self-employed people with income above $200,000 single, $250,000 married filing jointly, or $125,000 married filing separately. Employers do not match it. The thresholds are not adjusted for inflation.

Do retirees pay Medicare tax? Not on Social Security benefits, pensions, or portfolio withdrawals, since Medicare tax applies only to earned income. A retiree with wages or self-employment income still pays it at any age.

Can I deduct Medicare tax? Employees cannot. Self-employed people can deduct the employer-equivalent half of their self-employment tax as an adjustment to income, but not the additional 0.9% surtax.

Is Medicare tax the same as Medicare premiums? No. Medicare tax is a payroll tax you pay while working. Medicare premiums are what you pay for coverage once enrolled, and Part B and Part D premiums are income-adjusted through IRMAA based on your income from two years prior.