From January 1, 2013, Additional Medicare tax applies to an individual’s Medicare wages, compensation, and self-employment income that exceed a threshold amount based on the taxpayer’s filing status.
The Additional Medicare tax rate is 0.9% in addition to the 1.45% Medicare tax that all wage earners pay. Employers are required to withholding Additional Medicare Tax in the pay period in which it pays wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. The 0.9% tax applies only to employees, not to employers.
An Additional Medicare tax also applies to self-employment income for the tax year in excess of thresholds noted above. This 0.9% tax is added to the regular 2.9% Medicare tax on all self-employment income. The $250,000, $125,000, and $200,000 thresholds will be reduced by the taxpayer's wage income.
Married filing jointly
Married filing separate
Head of household
with dependent child
The net investment income tax on an individual’s net investment income is not applicable to wages or self-employment income. Thus, an individual will not owe net investment income tax on these categories of income, regardless of the taxpayer’s filing status.
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