What Are Medicare Wages?

Medicare wages are employee earnings that are subject to a U.S. payroll tax known as the Medicare tax. Similar to the other U.S. payroll tax, 澳洲幸运5官方开奖结果体彩网:Social Security, the Medicare tax is used to fund the government's Medicare program, which provides subsidized healthcare and hospital insuran🐬ce benefits to people ages 65 and older and people with disabilities.

Medicare and Social Security taxes are levied on both employees and employers under the 澳洲幸运5官方开奖结果体彩网:Federal Insurance Con🌊tributions Act (FICA).

Understanding Medicare Wages

There is no limit on Medicare wages. The employee's share of the 澳洲幸运5官方开奖结果体彩网:Medicare tax is a percentage withheld from their paycheck. In 2024 and 2025, the Medicare tax is 1.45% on an individual's wages. Employers also pay 1.45%.

There is also a 0.9% additional Medicare tax that only the employee filing an individual tax return pays for wages that exceed $200,000. The additional tax also applies to those whose wages exceed $250,000 if they are married and file a joint return and exceed $125,000 for married taxpayers filing a separate return.

For 2025, the rate for the 澳洲幸运5官方开奖结果体彩网:Social Security tax is 6.2% for the employee and 6.2% for the employer, or 12.4% total. The tax the first $168,600 in 2024 and the first $176,100 in 2025. The Social Security tax rate is assessed on all types of income that an employee earns, including salaries, wages, and bonuses.

Medicare Tax for Self-Employed People

Under the Self-Employed Contributions Act (SECA), self-employed people are also required to pay Social Security and Medicare taxes. In 2024 and 2025, the Medicare tax on a self-employ💯ed individual’s income is 2.9%, while the 🅷Social Security tax rate is 12.4%.

Self-employed individuals must pay double the Medicare and Social Security taxes that traditional employees pay because employers typically pay half of these taxes. But they are allowed to deduct half of their Medicare and Social Security taxes from their income taxes.

Special Considerations

In addition to noting particul﷽ar withdrawals for Medicare and Social Security from each paycheck, you should consider options for saving for retirement. In many cases, you can elect to have a portion deducted from your paycheck for this purpose.

Many companies, for example, offer a 澳洲幸运5官方开奖结果体彩网:401(k) plan. A 401(k) is a qualified employer-sponsored retirement plan that employees can contribute to. Earnings in a traditional 401(k) accrue on a tax-deferred basis—that is, you get a tax break upfront (because your contributions decrease your taxable income), but you have to pay taxes when you withdraw funds, typically in retirement. A澳洲幸运5官方开奖结果体彩网: Roth 401(k), in contrast, ဣgives you no upfront tax break, but withdrawals in retirement are typically tax-free, as long as you've had the account for at least five years.

A 403(b) retirement plan is comparable to a 401(k) plan, but is designed specifically for employees of public schools, 澳洲幸运5官方开奖结果体彩网:tax-exempt organizations, and certain ministers. A 457 plan is a retirement plan offered to state and local government employees.

You can also opt to save for retirement via an 澳洲幸运5官方开奖结果体彩网:individual retirement ✨account (IRA). As with a 401(k), there are two main types of IRAs: traditional and Roth. (There are also other types of IRAs, such as 澳洲幸运5官方开奖结果体彩网:SIMPLE IRAs.)

The Bottom Line

The Medicare tax is a payroll tax in the United States that funds the Medicare program, which provides health insurance for individuals aged 65 and older, as well as some younger people with disabilities. Both employers and employees pay the tax. For 2024 and 2025, the prevailing tax rate is 1.45% each, with different rates applied to higher earners. Self-employed people pay both the employee's and employer's portions, for 2.9% total.