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W-2 Box 5 — Medicare wages and tips

Your wages subject to Medicare tax. Unlike Social Security, there is no wage base cap — Box 5 can exceed Box 3 on high salaries.

At a glance — Box 5

Box name
Medicare wages and tips
Reports to
Not reported on 1040 directly.
Check against
Gross wages minus Section 125 pre-tax deductions and pre-tax HSA contributions — not minus 401(k)/403(b)/457(b) deferrals. Box 5 should match Box 3 up to the Social Security wage base and then keep rising above it, since Medicare has no cap.

What Box 5 means

Box 5 reports the wages the W-2 instructions describe as subject to Medicare tax, including tips reported. It's built the same way as Box 3 — gross pay minus pre-tax Section 125 cafeteria-plan deductions and pre-tax HSA contributions — but it is not reduced by traditional 401(k), 403(b), or 457(b) elective deferrals.

That's the same contrast that separates Box 3 from Box 1, and it's worth stating explicitly because it's the most common W-2 question after Box 12: a traditional 401(k) deferral lowers your federal taxable wages (Box 1) but not your FICA wages (Boxes 3 and 5), so Box 5, like Box 3, is routinely higher than Box 1 for anyone deferring into a traditional retirement plan. Section 125 premiums are the deduction that reduces all three boxes the same way, because they come out before either income tax or FICA is calculated. Roth 401(k)/403(b) contributions (codes AA/BB) are after-tax, so they're already counted in Box 1, Box 3, and Box 5 alike.

The difference between Box 3 and Box 5 shows up only at the top of the income range. Medicare tax has no wage base — there is no cap analogous to the Social Security wage base that limits Box 3. So Box 5 tracks Box 3 exactly up through the Social Security wage base, then keeps climbing on its own for anyone earning above it, while Box 3 stays flat.

Box 5 also determines whether your employer had to withhold the 0.9% Additional Medicare Tax. Under IRC §3101(b)(2), once Box 5 wages from a single employer pass $200,000 in a calendar year, that employer must withhold the extra 0.9% on the excess — regardless of your actual filing status or what any other employer paid you. Employer-paid health insurance premiums, by contrast, are never wages for any purpose and never appear in Box 5 at all.

Tax return implications

  • Used to verify that Box 6 was withheld correctly: 1.45% of Box 5, plus 0.9% on the portion of Box 5 above $200,000 at this employer.
  • Feeds Form 8959, where your Additional Medicare Tax liability is finally reconciled against your actual filing-status threshold rather than the flat $200,000 per-employer withholding trigger.
  • Unlike Box 3 plus Box 7, Box 5 does not build Social Security retirement, disability, or survivor benefits — Medicare tax funds Medicare Part A (Hospital Insurance) only.
  • If you have multiple employers each paying you under $200,000, none of them individually withholds the Additional Medicare Tax — but you may still owe it at filing if your combined wages cross your actual threshold.
  • Employer-paid health, dental, and most other employer-sponsored insurance premiums are excluded from Box 5 entirely — they're never treated as wages, so there's nothing to reconcile there.

Common pitfalls & things to check

  • Seeing Box 5 exceed Box 3 is normal once you're above the Social Security wage base — that's Medicare's uncapped design working as intended, not an error.
  • If you earn above $200,000 at a single employer, expect the extra 0.9% withheld automatically, even if your actual filing-status threshold is higher (e.g., $250,000 MFJ) — the true liability is settled on Form 8959, potentially as a credit.
  • The reverse gap is easy to miss: two employers each paying under $200,000 that combine to more than your MFJ ($250,000) or MFS ($125,000) threshold can leave you owing Additional Medicare Tax that nobody withheld.
  • Don't expect employer-paid health insurance premiums to appear here — they're excluded from wages for every tax purpose, not just Box 1.
  • A Box 5 far above Box 1 with no unusual deferrals is worth a second look — imputed income items like group-term life insurance over the statutory exclusion also inflate Box 5, not just retirement deferrals.

FAQ

Why is my Box 5 higher than my Box 3?

You're earning above the Social Security wage base. Box 3 caps there; Box 5 has no cap and keeps rising with your gross Medicare wages.

Why is my Box 5 higher than my Box 1?

Traditional 401(k)/403(b)/457(b) deferrals reduce Box 1 but not Box 5 — the same reason Box 3 runs higher than Box 1.

Does Box 5 include my employer's health insurance contribution?

No. Employer-paid premiums for health, dental, and most other coverage are excluded from wages entirely and never appear in Box 5.

What does Box 5 actually pay for?

Medicare Part A (Hospital Insurance). Unlike Social Security wages, Medicare wages don't factor into any retirement benefit calculation.

Related W-2 boxes

Reconciling your W-2 at tax time? Use the paycheck calculator to verify expected federal, Social Security, and Medicare withholdings on your salary, and the federal income tax calculator to estimate your refund or balance owing before you file.

Sources

W-2 box definitions per IRS General Instructions for Forms W-2 and W-3 and IRC §6051. Rates and thresholds current for tax year 2025 (file by April 15, 2026); 2026 figures included where published.

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