Additional Medicare Tax
An extra 0.9% Medicare surtax on earned income above $200,000 (single) or $250,000 (married filing jointly). Unlike regular Medicare tax, it is not matched by employers.
The Additional Medicare Tax is a 0.9% surtax that applies to earned income (wages, compensation, and self-employment income) above certain thresholds. For single filers the threshold is $200,000, for married filing jointly it is $250,000, and for married filing separately it is $125,000.
This tax was introduced by the Affordable Care Act in 2013. Employers are required to begin withholding the additional 0.9% once an employee's wages exceed $200,000 in a calendar year, regardless of filing status. This means some married couples may need to adjust on their return.
The Additional Medicare Tax is calculated on Form 8959, which is filed with your tax return. There is no employer match for this surtax. Combined with the base 1.45% employee Medicare tax, high earners effectively pay 2.35% in Medicare taxes on income above the threshold.
Related Terms
Medicare Tax
A 1.45% payroll tax on all wages with no income cap, matched by employers. High earners pay an Additional Medicare Tax of 0.9% on wages over $200,000 (single).
FICA
Federal Insurance Contributions Act taxes that fund Social Security (6.2%) and Medicare (1.45%). Both employees and employers pay FICA, totaling 15.3% on wages.
Net Investment Income Tax (NIIT)
A 3.8% surtax on investment income (interest, dividends, capital gains, rental income) for individuals with modified AGI above $200,000 (single) or $250,000 (married filing jointly).