Medicare Tax Explained (2025)

Medicare tax is the smaller half of FICA. It’s a 1.45% payroll tax that funds Medicare — the federal hospital insurance program for people aged 65 and over. Its defining feature: there’s no income cap.

1.45% on every dollar

Unlike Social Security, which stops at a wage base, Medicare applies to all your wages — the first dollar and the millionth. Your employer matches it, so 2.9% in total goes to Medicare.

The Additional Medicare Tax

Who pays it

• Employees — 1.45% withheld automatically (plus 0.9% if you’re a high earner).
• Employers — match the 1.45% (but not the surtax).
• Self-employed — pay the full 2.9% themselves as part of self-employment tax.

Does anything reduce it?

Pre-tax health premiums and HSA contributions can reduce the wages Medicare is charged on, but a traditional 401(k) does not — it lowers income tax only. See how much tax comes out of your paycheck for the full picture.

See it on your salary

Our calculator lists Medicare separately, including the additional surtax once your income crosses the threshold — drop in any salary to see your exact amount.