Additional Medicare tax

ADDITIONAL MEDICARE TAX

 

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.

 

Thresholds:

 

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.

Single

$200,000

Married filing jointly

$250,000

Married filing separate

$125,000

Head of household

$200,000

Qualifying widow(er)

with dependent child

$200,000

 

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.

 

More on the Net Investment Income Tax.

 

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