When Do You Stop Paying Medicare Taxes: Exemptions and Refunds

You stop paying Medicare taxes when you stop receiving wages or net self-employment earnings, not when you turn a certain age and not when you enroll in Medicare. The 1.45% employee tax has no wage ceiling and no age cutoff, so as long as a paycheck is coming in, the tax comes out of it.¹ Two related taxes follow their own rules: a 0.9% surcharge on high earners ends when earned income falls below the threshold, and a 3.8% tax on investment income can keep applying long after you retire.

Turning 65 Does Not End the Tax

Nothing in the tax code exempts workers because of age or Medicare enrollment. If you keep working past 65, whether full-time, part-time, or on contract, your employer must keep withholding the 1.45% Medicare tax from every paycheck.¹ The employer matches that amount for a combined 2.9%. Unlike Social Security tax, which stops at the first $184,500 of 2026 wages, Medicare tax applies to every dollar you earn.² Someone earning $50,000 and someone earning $500,000 both pay 1.45% on the whole amount.

Retirement Income That Is Not Taxed for Medicare

The tax stops for retirees because the income they live on falls outside the definition of wages. Social Security benefits, pension payments, 401(k) distributions, and traditional IRA withdrawals are not earned income and do not trigger Medicare tax.³ Shifting your primary income to these sources is what actually ends the obligation. The birthday itself does nothing.

Self-Employment: The $400 Floor

If you work for yourself, you pay both halves of the tax, for a combined 2.9% rate on your net self-employment earnings, calculated on Schedule SE with your annual return.⁴ You stop owing self-employment tax for a year when your net earnings fall below $400. Below that, you generally do not need to file Schedule SE at all.⁵ Closing the business or retiring from freelance work ends the obligation once you file your final return.

Final Paychecks Still Count

Leaving a job does not immediately end the tax. Severance pay, cashed-out unused vacation time, and bonuses paid after your last day are all treated as taxable wages, and the employer must withhold Medicare tax on them.⁶ The tax truly ends only when no further compensation tied to your services is coming.

When the 0.9% Additional Medicare Tax Stops

High earners owe an extra 0.9% on earned income above these thresholds, which have not changed since 2013 and are not indexed for inflation:¹

Single filers: $200,000
Married filing jointly: $250,000
Married filing separately: $125,000

The surcharge only touches income above your threshold. If a one-time bonus pushes you over one year and your earnings return to normal the next, the surcharge disappears on its own. Self-employed workers face the same thresholds on their net self-employment income.⁴

One trap catches people with more than one job. Each employer tracks the $200,000 mark independently, ignoring what you earn elsewhere.³ Two jobs at $150,000 each add up to $300,000, but neither employer withholds the surcharge because neither paycheck crossed the line. You settle up when you file. The reverse also happens: if withholding was triggered but your combined income stays below your filing threshold, you can claim the excess back on your return.

The 3.8% Net Investment Income Tax Can Outlast Your Career

Even after wages stop, a related tax may keep applying. The Net Investment Income Tax is a 3.8% tax on investment earnings once your modified adjusted gross income passes the same thresholds used for the Additional Medicare Tax:⁷

Single filers: $200,000
Married filing jointly: $250,000
Married filing separately: $125,000

The tax applies to the lesser of your net investment income or the amount by which your modified adjusted gross income exceeds the threshold. Investment income here means interest, dividends, capital gains, rental and royalty income, and nonqualified annuities. Wages, Social Security benefits, and most self-employment income are not included.⁸ These thresholds are also fixed, not adjusted for inflation.

The NIIT is separate from payroll Medicare taxes and never hits the same income twice. For retirees with sizable portfolios, though, it can act like an ongoing Medicare-related tax long after paychecks stop. It ends for a given year when your modified adjusted gross income falls back below the threshold for your filing status.

Groups Who Can Stop Paying While Still Working

A few categories of workers legally do not owe Medicare tax on their wages.

Members of Recognized Religious Sects

If you belong to a recognized religious group that opposes accepting public or private insurance benefits, you can apply to be exempt from both Social Security and Medicare taxes by filing Form 4029.⁹ The exemption covers self-employment tax under IRC § 1402(h), and it covers FICA when the employer and employee are both members of the same qualifying sect under IRC § 3127.¹⁰ Approval requires permanently waiving any right to Social Security and Medicare benefits.

Students Working at Their School

Students employed by the school, college, or university where they are enrolled and regularly attending classes are generally exempt from FICA taxes on that campus job.¹¹ The exemption applies only when the person’s primary relationship with the school is educational, so the job is secondary to their studies.¹² Working for an outside employer while enrolled does not qualify.

Certain Nonresident Aliens

Nonresident alien students, scholars, teachers, and trainees temporarily in the U.S. on F-1, J-1, M-1, or Q-1 visas do not owe Social Security or Medicare taxes on wages earned for services allowed under their visa.¹³ The exemption lasts only while the person remains a nonresident alien for tax purposes; once they become a resident alien, it ends. Dependents on derivative visas (F-2, J-2, M-2) do not qualify.

Getting Back Medicare Tax You Should Not Have Paid

If a single employer withheld too much standard Medicare tax, ask them to correct it first. If they will not, file Form 843 (Claim for Refund and Request for Abatement) with a copy of your W-2.¹⁴

Form 843 does not work for the Additional Medicare Tax. For that, file Form 8959 with your annual return; it reconciles the amount you actually owe against what was withheld, and any excess becomes a credit against your total tax.¹⁵

The general deadline for a refund claim is three years from when you filed the original return, or two years from when you paid the tax, whichever is later.¹⁴

1
Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax
2
Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
3
Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
4
Office of the Law Revision Counsel. 26 USC 1401 – Rate of Tax
5
Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
6
Internal Revenue Service. Publication 15 (Circular E), Employer’s Tax Guide
7
Office of the Law Revision Counsel. 26 U.S. Code 1411 – Imposition of Tax
8
Internal Revenue Service. Net Investment Income Tax
9
Internal Revenue Service. About Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits
10
Office of the Law Revision Counsel. 26 U.S. Code 3127 – Exemption for Employers and Their Employees Where Both Are Members of Religious Faiths Opposed to Participation in Social Security Act Programs
11
Internal Revenue Service. Student Exception to FICA Tax
12
Internal Revenue Service. Student FICA Exception
13
Internal Revenue Service. Aliens Employed in the U.S. – Social Security Taxes
14
Internal Revenue Service. Instructions for Form 843 – Claim for Refund and Request for Abatement
15
Internal Revenue Service. Instructions for Form 8959