Medicare Tax
Medicare withholding — 1.45% of all wages, no cap. Funds the federal health insurance program for people 65+.
Who pays it
Every W-2 employee. No wage cap — applies to every dollar you earn.
How much
1.45% of all wages. If you earn over $200,000 (single) or $250,000 (married), an additional 0.9% kicks in on the excess.
Where it appears on your W-2
Box 6 (Medicare tax withheld), Box 5 (Medicare wages).
Tax impact
Not deductible. Like Social Security, Medicare wages exclude pre-tax 401(k)/HSA from the Box 5 number being higher than Box 1.
Common questions about MED
Why is there a separate Medicare tax for high earners?
Affordable Care Act added an extra 0.9% on income above $200,000 single / $250,000 married. Your employer must withhold it once your YTD wages cross $200,000, regardless of filing status.
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