The Additional Medicare Tax is a 0.9% surtax on wages, self-employment earnings, and railroad retirement compensation above thresholds set by your filing status. It was created by the Affordable Care Act, took effect in 2013, and applies only to the worker. There is no employer match. Because the dollar thresholds are written into the statute and have never been indexed to inflation, more earners cross them every year.
Income Thresholds by Filing Status
Under 26 U.S.C. § 3101(b)(2), the surtax kicks in above these amounts:1Office of the Law Revision Counsel. 26 U.S. Code 3101 – Rate of Tax
- Married filing jointly: $250,000 of combined income
- Single, head of household, or qualifying surviving spouse: $200,000
- Married filing separately: $125,000
These numbers do not adjust annually. Changing them would take an act of Congress. Someone whose salary comfortably cleared the threshold a decade ago may only now be feeling it.
What Income Is Subject to the Tax
The 0.9% applies to money you actively earn, not to investment returns. Three categories count:2Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
- W-2 wages and tips, meaning everything reported in Box 5: salary, hourly pay, bonuses, and commissions.
- Net self-employment income after the standard 92.35% factor. A self-employment loss does not offset wages.
- Tier 1 railroad retirement compensation.
Two items catch high earners off guard. Non-qualified stock option exercises and vesting RSUs are part of your Medicare wages, so a large single-quarter vest can push you over the threshold without warning. Noncash fringe benefits count too.
Interest, dividends, capital gains, rents, and royalties are not subject to this tax. They may trigger the separate Net Investment Income Tax, which is a different rule handled below.
How the Tax Is Calculated
If all your income comes from one W-2 job, the math is direct. Subtract your threshold from your total Medicare wages and multiply the excess by 0.9%. A single filer with $260,000 in wages owes 0.9% on $60,000, or $540.
When you have both wages and self-employment income, the IRS uses a three-step process so you cannot claim the threshold twice:2Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
- Tax any wages over your filing-status threshold at 0.9%.
- Reduce your threshold by your total wages, but not below zero.
- Tax any self-employment income above that reduced threshold at 0.9%.
Say you file single with $180,000 in wages and $50,000 in net self-employment income. Wages fall under $200,000, so nothing is owed there. The threshold drops to $20,000 after subtracting wages. Self-employment income above that $20,000 remainder gets taxed: $30,000 at 0.9%, which is $270. The same coordination is built into 26 U.S.C. § 1401(b)(2).3Office of the Law Revision Counsel. 26 USC 1401 – Rate of Tax
Why Employer Withholding Rarely Matches What You Owe
Your employer must begin withholding the 0.9% once your wages from that one job pass $200,000 in a calendar year, and withholding continues for the rest of the year once triggered.4Internal Revenue Service. Instructions for Form 8959 – Additional Medicare Tax The employer ignores your filing status, your spouse’s income, and anything you earn on the side. That flat trigger creates two common mismatches.
The first hits married couples filing jointly. If each spouse earns $160,000, neither employer withholds anything, because each is under $200,000. But combined income is $320,000, which is $70,000 over the joint threshold. The couple owes $630 at tax time with nothing prepaid. The IRS specifically points these couples to estimated payments or extra W-4 withholding.2Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
The second hits married filers filing separately. A spouse earning $210,000 has 0.9% withheld on only $10,000, but their real threshold is $125,000, so they actually owe on $85,000. And a married-filing-separately spouse earning $130,000 has nothing withheld yet owes on $5,000.
Adjusting Your Withholding or Paying Estimates
You cannot ask your employer to withhold Additional Medicare Tax specifically. What you can do is request extra income tax withholding on Form W-4, Step 4(c). That extra amount gets applied against your total tax liability, including the surtax, when you file.2Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
The IRS Tax Withholding Estimator can help you land on a reasonable figure, particularly if you have more than one income source. It generates a pre-filled W-4 you can hand to your employer.5Internal Revenue Service. Tax Withholding Estimator
Self-employed workers, and anyone whose withholding will clearly fall short, should use quarterly estimated payments instead. For tax year 2026, individual estimated tax payments are due April 15, June 15, and September 15, 2026, and January 15, 2027.6Internal Revenue Service. Publication 509 (2026), Tax Calendars
Filing Form 8959
You must file Form 8959 with your return if any of these apply:4Internal Revenue Service. Instructions for Form 8959 – Additional Medicare Tax
- Medicare wages on any single W-2 (Box 5) exceed $200,000.
- RRTA compensation on any single W-2 (Box 14) exceeds $200,000.
- Your combined Medicare wages and self-employment income, plus your spouse’s if filing jointly, exceed the threshold for your filing status.
The first trigger matters even if your final tax liability is zero. If a single W-2 shows more than $200,000 in Box 5, your employer withheld the surtax, and the IRS needs Form 8959 to reconcile withholding against what you actually owe.
Pull every W-2 for the year. Box 5 shows Medicare wages; Box 6 shows total Medicare tax withheld, which already includes any Additional Medicare Tax. There is no separate box or code for the surtax portion.7Internal Revenue Service. 2026 General Instructions for Forms W-2 and W-3 If you have self-employment income, you also need net earnings from Schedule SE. The completed Form 8959 flows to Schedule 2 (Form 1040), line 11.4Internal Revenue Service. Instructions for Form 8959 – Additional Medicare Tax
Getting Back Over-Withheld Amounts
When an employer withholds more than you actually owe, you claim the difference through your return. Part V of Form 8959 totals the Additional Medicare Tax withheld, and line 24 of that form adds to your federal income tax withholding on Form 1040, line 25c.8Internal Revenue Service. Form 8959, Additional Medicare Tax If total withholding exceeds total tax, you get a refund the normal way.
You cannot recover over-withholding directly from your employer after the calendar year closes. If the employer catches the error within the same year, they can correct and reimburse you. After year-end, the tax return is the only route.2Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
Not the Same as the Net Investment Income Tax
The Additional Medicare Tax and the 3.8% Net Investment Income Tax (NIIT) share the same filing-status thresholds and often get confused, but they cover different money. The 0.9% surtax covers wages, self-employment income, and RRTA compensation. The NIIT covers interest, dividends, capital gains, rental and royalty income, and passive business income.9Internal Revenue Service. Net Investment Income Tax No dollar is hit by both.
You can still owe both in the same year if you have high earned income and substantial investment returns. A married couple filing jointly with $300,000 in wages and $80,000 in investment income would owe the 0.9% surtax on $50,000 of wages and could owe the NIIT on some or all of the investment income, depending on modified AGI. The Additional Medicare Tax uses Form 8959; the NIIT uses Form 8960.
Penalties If You Underpay
The surtax is not a separate bill. It rolls into your total federal tax liability, and if you underpay overall, the standard consequences apply. Unpaid tax accrues a failure-to-pay penalty of 0.5% per month, capped at 25% of the balance.10Internal Revenue Service. Failure to Pay Penalty11Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 202612Internal Revenue Service. Internal Revenue Bulletin: 2026-8
There is also a separate estimated tax penalty if you did not pay enough during the year. To avoid it, you generally need to have paid at least 90% of the current year’s tax or 100% of last year’s through withholding and estimates combined. If your prior-year AGI was over $150,000 ($75,000 if married filing separately), the prior-year safe harbor rises to 110%.13Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty Most people first tripped by the surtax already sit in that higher-income bracket, so 110% is the number to hit.
If you set up an approved installment plan, the failure-to-pay penalty drops from 0.5% to 0.25% per month while the plan is active.10Internal Revenue Service. Failure to Pay Penalty Interest keeps running regardless, so paying the balance down quickly is what saves the most.