Your employer withholds 1.45% of your gross wages for Medicare tax out of every paycheck, with no annual wage cap. Once your pay from that employer passes $200,000 in a calendar year, an extra 0.9% starts coming out of the wages above that line, so your Medicare withholding rate on those higher dollars rises to 2.35%. The employer also pays a 1.45% match on your wages, but it does not match the 0.9% surcharge.
The Standard 1.45% Rate
Every W-2 employee pays 1.45% of gross wages toward Medicare, and the employer pays a matching 1.45%, for a combined 2.9% on each paycheck.1Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates Your employer calculates the withholding, deducts your share, adds its own, and sends both portions to the IRS. The employer half never appears on your pay stub, but it is being paid on your wages.
Unlike Social Security tax, Medicare tax has no wage base limit. Social Security withholding stops once your year-to-date earnings cross the annual cap ($184,500 in 2026).1Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates Medicare withholding does not. Whether you earn $30,000 or $3 million, every dollar of covered wages is subject to the 1.45%.
On a paycheck, that math is simple. An employee earning $4,000 in a biweekly period has $58.00 withheld for Medicare ($4,000 × 0.0145). The employer sends another $58.00 from its own funds. At the same pay rate across 26 periods, total employee-side Medicare withholding for the year comes to $1,508.
When the Rate Jumps to 2.35%
Once your wages from a single employer cross $200,000 for the calendar year, that employer must start withholding an additional 0.9% on every dollar above $200,000, on top of the standard 1.45%.2Internal Revenue Service. Questions and Answers for the Additional Medicare Tax Your employee-side withholding on those higher wages becomes 2.35%.
The employer does not match this extra 0.9%. So the full Medicare tax burden on wages above $200,000 is 3.8% (your 2.35% plus the employer’s unchanged 1.45%).3Internal Revenue Service. Topic No. 560, Additional Medicare Tax You cannot ask your employer to turn the extra withholding off once your pay crosses the trigger.4Internal Revenue Service. 2025 Instructions for Form 8959, Additional Medicare Tax
Why Your Withholding May Not Match What You Actually Owe
Employers apply the $200,000 trigger the same way for every employee, regardless of filing status, because they have no way of knowing your spouse’s income or how you’ll file. The actual thresholds for owing the Additional Medicare Tax on your return are different:
- Single or Head of Household: $200,000
- Married Filing Jointly: $250,000 (combined wages and self-employment income)
- Married Filing Separately: $125,000
- Qualifying Surviving Spouse: $200,000
These thresholds are not indexed for inflation and stay the same every year.5Internal Revenue Service. Instructions for Form 8959, Additional Medicare Tax
The gap between the flat $200,000 withholding trigger and the filing-status thresholds produces two common surprises. A married couple filing jointly whose combined income is $300,000 but split as $150,000 each at separate jobs will see no additional withholding from either employer, yet owe the 0.9% on the $50,000 above their $250,000 joint threshold when they file.5Internal Revenue Service. Instructions for Form 8959, Additional Medicare Tax A single high earner at one job gets the extra withheld starting at $200,000 and simply has it applied correctly on the return.
You settle up on IRS Form 8959, filed with your Form 1040. The form calculates what you actually owe based on your filing status and total Medicare wages, compares that to what your employer withheld, and either credits the excess against your overall tax liability or adds the shortfall to your bill.2Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
What Wages the Tax Comes Out Of
Medicare tax applies to nearly every form of cash compensation: salary, hourly wages, commissions, bonuses, severance, accrued vacation payouts, and tips you report to your employer. Taxable fringe benefits count too. If your employer provides group-term life insurance above $50,000 in coverage, the imputed cost of the excess is added to your Medicare wages even though no cash lands in your account.6Office of the Law Revision Counsel. 26 USC 79, Group-Term Life Insurance Purchased for Employees
Pre-Tax Deductions That Reduce the Base
Salary-reduction contributions through a Section 125 cafeteria plan are generally excluded from both income tax and FICA wages.7Internal Revenue Service. FAQs for Government Entities Regarding Cafeteria Plans Pre-tax premiums for employer-sponsored health, dental, and vision coverage reduce your Medicare taxable wages, and so do HSA and FSA contributions made through a cafeteria plan.8Internal Revenue Service. Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans
Pre-Tax Deductions That Don’t
Traditional 401(k) contributions escape federal income tax but are still subject to Social Security and Medicare tax.9Internal Revenue Service. 401(k) Plan Overview The same is true of 403(b) and 457(b) deferrals. That is why Box 5 (Medicare wages) on your W-2 is often larger than Box 1 (federal taxable wages): retirement contributions reduce Box 1 but not Box 5.10Internal Revenue Service. Publication 15 (2026), Employer’s Tax Guide
Checking the Numbers on Your W-2
Two boxes carry the Medicare information. Box 5 is your total Medicare wages and tips, the base your employer used to calculate the tax. Box 6 is the total Medicare tax withheld during the year, including any Additional Medicare Tax.11Internal Revenue Service. General Instructions for Forms W-2 and W-3 (2026) If none of your wages crossed $200,000, Box 6 should equal Box 5 × 0.0145. If some did, Box 6 will be higher by 0.9% of the excess.
Who Is Exempt
Most workers cannot avoid Medicare tax, but a few narrow exemptions apply.
Students Working at Their School
If you are enrolled at least half-time at a college or university and work for that same institution, your wages may be exempt from FICA under the student FICA exception. The job must be incidental to your studies, and you cannot be classified as a professional employee, meaning you are not eligible for the school’s retirement plan, vacation benefits, or similar career-staff perks.12Internal Revenue Service. Student FICA Exception Off-campus work for an unrelated employer does not qualify.
Certain Nonresident Aliens
Foreign students and exchange visitors in F-1, J-1, or M-1 status who have been in the United States for fewer than five calendar years are generally exempt from Medicare and Social Security tax on wages for services their visa permits.13Internal Revenue Service. Foreign Student Liability for Social Security and Medicare Taxes After five years, once they meet the substantial presence test, they typically become subject to FICA like other workers unless they still qualify under the student exception.
Members of Certain Religious Groups
Members of recognized religious sects in continuous existence since at least December 31, 1950 that oppose insurance benefits, including Social Security and Medicare, can apply for an exemption on IRS Form 4029. The sect must have established tenets against accepting public or private insurance and a record of caring for its dependent members.14eCFR. 26 CFR 1.1402(h)-1, Members of Certain Religious Groups Opposed to Insurance Approval requires a finding from the Department of Health and Human Services, and anyone who has already received Social Security or Medicare benefits is ineligible.
If you work for yourself rather than on a W-2, nothing is withheld from a paycheck because there isn’t one; the full 2.9% Medicare share (plus the 0.9% surcharge where it applies) is paid directly through self-employment tax on your return.15Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)