The line labeled “Medi,” “Med,” or “MedFICA” on your paycheck is the Medicare tax on your paycheck: a federal payroll deduction of 1.45% of your gross wages that funds Medicare health coverage for people 65 and older and for certain younger people with disabilities. Your employer withholds it every pay period and pays a matching 1.45% from its own funds. Unlike Social Security tax, there is no ceiling on how much of your income gets taxed.1Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax2Social Security Administration. What Are FICA and SECA Taxes?
The Rate and What It Applies To
Federal law sets the employee rate at a flat 1.45% of wages, and your employer’s matching contribution brings the total to 2.9%.1Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax3Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates4Social Security Administration. Contribution and Benefit Base
The tax applies to nearly every form of pay you get from an employer: hourly wages, salary, reported tips, bonuses, commissions, and overtime. Certain fringe benefits count too, such as the value of employer-provided group-term life insurance coverage above $50,000.3Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
Money you did not earn from work is not part of this calculation. Interest, dividends, and profits from selling stock follow separate rules and don’t show up in the “Medi” line on your stub.
Why Your Medicare Wages May Not Match Your Gross Pay
Box 5 of your W-2, labeled “Medicare wages and tips,” often reads differently from your total gross pay for the year. Two common reasons:
Contributions you make to a traditional 401(k) or 403(b) do not reduce your Medicare wages. Those retirement dollars still get hit with the 1.45%.5Internal Revenue Service. Retirement Plan FAQs Regarding Contributions
Premiums you pay for employer health, dental, or vision coverage through a Section 125 cafeteria plan generally are excluded from Medicare wages.6Internal Revenue Service. FAQs for Government Entities Regarding Cafeteria Plans The same goes for HSA contributions made through a cafeteria plan.7Internal Revenue Service. Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans Those pre-tax health dollars come out before the 1.45% is calculated, so your Medicare wages end up lower than your gross.
The Extra 0.9% at Higher Income Levels
Once your wages cross certain thresholds, an Additional Medicare Tax of 0.9% kicks in on top of the standard 1.45%. Your employer does not match this piece. The thresholds are set by statute and don’t adjust with inflation:1Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax
- $200,000 if you file as single or head of household
- $250,000 combined if you file jointly as a married couple
- $125,000 if you file married filing separately
Your employer starts withholding the surcharge as soon as your wages from that job pass $200,000 in a calendar year. It does this the same way regardless of your filing status and without knowing anything about your spouse’s income.8eCFR. 26 CFR Part 31 Subpart B – Tax on Employees That creates two kinds of mismatches at tax time.
If you and your spouse each earn under $200,000 but together you clear $250,000, no employer withheld the 0.9% and you’ll owe it on the amount above the joint threshold. The reverse also happens: if your individual wages passed $200,000 but your household falls under $250,000 filing jointly, your employer withheld more than you actually owe.9Internal Revenue Service. Questions and Answers for the Additional Medicare Tax Both situations are settled on Form 8959, filed with your annual return.10Internal Revenue Service. 2025 Instructions for Form 8959 – Additional Medicare Tax
If You Are Self-Employed
Working for yourself means there’s no employer to split the tab. You pay the full 2.9% Medicare tax on your net self-employment earnings under the Self-Employment Contributions Act, and the 0.9% additional tax applies to earnings above your filing threshold, taking that top portion to 3.8%.11Office of the Law Revision Counsel. 26 USC 1401 – Rate of Tax
Because there’s no paycheck to withhold from, you generally pay through quarterly estimated tax payments to the IRS. When you file your return, you can deduct half of your total self-employment tax as an above-the-line adjustment, which mirrors the employer-side portion a wage earner never sees on their W-2.12Internal Revenue Service. Topic No. 554, Self-Employment Tax
Getting Back Medicare Tax That Shouldn’t Have Been Withheld
If your employer took out the standard 1.45% on wages that were actually exempt, the first step is to ask the employer to correct the overcollection and refund it directly. If they won’t, you can file Form 843 with the IRS to claim a refund. Attach your W-2 and, if you have one, a statement from the employer about any amount they already paid back. You generally have three years from the date you filed the return, or two years from the date the tax was paid, whichever is later.13Internal Revenue Service. Instructions for Form 843 – Claim for Refund and Request for Abatement
Over-withholding of the 0.9% additional tax works differently. That gets reconciled on Form 8959 with your regular return. Part V of the form compares what was withheld against what you actually owe based on your filing status, and any excess becomes a credit against your total tax liability.10Internal Revenue Service. 2025 Instructions for Form 8959 – Additional Medicare Tax This is also where multiple-job workers sort things out: if you had two employers who each withheld the surcharge past $200,000, you settle up here.
Who Doesn’t Pay It
Most workers pay Medicare tax from their first dollar of wages. A few narrow categories are exempt.
Students employed by the college or university where they are enrolled can qualify for a FICA exemption on those wages, if the educational relationship is the primary reason they are at the school rather than the job.14Internal Revenue Service. Student Exception to FICA Tax
Nonresident aliens in F-1, J-1, or M-1 visa status are generally exempt from Medicare tax on wages earned within their visa purpose during their first five calendar years in the United States. After that, once they meet the substantial presence test, they typically owe the tax like other workers.15Internal Revenue Service. Foreign Student Liability for Social Security and Medicare Taxes
Members of recognized religious sects that oppose public insurance can apply for an exemption from both Social Security and Medicare tax, but only if they waive all future benefits from those programs.16eCFR. 20 CFR Part 404 Subpart K – Exemption From Social Security by Reason of Religious Belief
If none of those categories fits, the 1.45% comes out of every paycheck, every year, on every dollar you earn.