Additional Medicare tax
Additional Medicare tax is a 0.9% employee-only Medicare tax you withhold on wages you pay an employee over $200,000 in a calendar year.
- LAW
- 26 U.S.C. §§3101(b)(2), 3102(f)
- RATE
- 0.9%, employee only, no employer match
- CAP
- None above the $200,000 withholding threshold
- WATCH FOR
- Miss the trigger and you can owe the tax
The tax sits on top of the standard 1.45% Medicare tax, which applies to every dollar of wages with no limit. You begin withholding it in the pay periodPay period. A pay period is the recurring block of time, such as a week or a month, for which you calculate and pay wages.Click to open the term in which the wages you pay an employee pass $200,000 for the calendar year. There is no employer matchEmployer match. An employer match is the plan contribution you add on account of an employee’s deferrals, usually a percentage of them up to a pay cap.Click to open the term. Filing status and a spouse’s wages do not change your trigger. The employee’s final liability uses filing-status thresholds and is settled on Form 8959 with their tax return.
What are the thresholds?
Your withholding trigger is always $200,000 of wages you pay in a calendar year. The employee’s actual liability uses a threshold set by filing status. It counts wages from every job plus self-employment income, combined with a spouse’s on a joint return. All wages subject to Medicare tax count, including noncash fringe benefits and tips.
| WHO | TAX APPLIES ABOVE |
|---|---|
| Your withholding | $200,000 of wages you pay in a calendar year |
| Married filing jointly | $250,000, combined with the spouse |
| Married filing separately | $125,000 |
| Single, head of household, or qualifying widow(er) | $200,000 |
Withholding and reporting
You cannot honor an employee’s request to stop withholding Additional Medicare tax. It uses the same Medicare wages as the standard tax, only above your $200,000 line.
- 01
Track Medicare wages for each employee through the calendar year, including noncash fringe benefits and tips.
- 02
Start withholding 0.9% in the pay period your wages to the employee pass $200,000, on the excess only.
- 03
Report it on Form 941 line 5d each quarter, on each employee’s wages above the $200,000 threshold.
- 04
Show it in Form W-2 box 6, together with the standard Medicare tax withheld.
Why your withholding may not match the final bill
You see only the wages you pay, so you withhold against your own $200,000 line. The employee’s liability depends on every job, any self-employment income, a spouse’s income on a joint return, and filing status. The employee reconciles the difference on Form 8959, not through payroll. Any Additional Medicare tax you withheld is credited against the total tax on their return. An employee who expects to owe more can request extra income tax withholding on Form W-4Form W-4. Form W-4 is the IRS form an employee completes to tell their employer how much federal income tax to withhold from each paycheck.Click to open the term.
Frequently asked
- Questions and answers for the Additional Medicare Tax
- 26 U.S. Code § 3101 - Rate of tax
- 26 U.S. Code § 3102 - Deduction of tax from wages
- About Form 8959, Additional Medicare Tax
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.