Medicare tax is normally 1.45% of wages paid by the employee, with a matching amount from the employer. Higher earners owe an extra 0.9% on top. This Additional Medicare Tax is paid only by the employee or self-employed person, and it is based on your total income across all jobs and your filing status. The thresholds are not indexed for inflation, so more people reach them each year. This guide explains who pays it and why withholding often falls short.
Who owes it
The Additional Medicare Tax applies to the total of your Medicare wages and your net self-employment earnings. If that total is above the threshold for your filing status, you owe 0.9% on the amount over the line. It is separate from the 3.8% net investment income tax, and the Additional Medicare Tax does not apply to investment income such as interest, dividends or capital gains.
| Filing status | Threshold (same for 2025 and 2026) |
|---|---|
| Married filing jointly | $250,000 |
| Married filing separately | $125,000 |
| Single | $200,000 |
| Head of household | $200,000 |
| Qualifying surviving spouse | $200,000 |
The thresholds are written into the law and are not adjusted for inflation, so they are the same for 2025 and 2026. The tax applies to citizens, residents and nonresident aliens alike if their income subject to Medicare tax is above the threshold. Tips count as wages.
How employer withholding works
Your employer must start withholding the extra 0.9% in the pay period when your wages from that employer first exceed $200,000 in a calendar year, and continue for the rest of the year. This is true no matter whether you are single or married, and your employer does not combine your wages with a spouse's or with wages from other employers. You cannot ask the employer to stop withholding.
The mismatch between the $200,000 withholding rule and the $250,000 joint threshold is why many people end up with a balance due or a credit.
Example 1: Maya and Rohan, married filing jointly, each earn $150,000 in 2025. Neither employer withholds the additional tax because neither person's wages top $200,000. But their combined wages of $300,000 exceed the $250,000 joint threshold by $50,000, so they owe 0.9% x $50,000 = $450 on Form 8959. If they do not plan ahead, it appears as part of a larger balance due.
Example 2: Dev is single with $200,000 in wages from one employer and no other income. The employer does not withhold, because wages must exceed $200,000. He also does not owe the tax, because his income does not exceed the threshold.
Example 3: A single consultant has $180,000 in W-2 wages and $60,000 of Schedule C profit in 2025. Net earnings from self-employment are $60,000 x 92.35% = $55,410. Before applying the tax to self-employment income, the threshold is reduced by wages, so $200,000 - $180,000 = $20,000 remains. The tax is 0.9% x ($55,410 - $20,000) = about $319.
Self-employed filers
If you work for yourself, the 0.9% applies to your net earnings from self-employment over the threshold. Medicare wages and self-employment earnings are combined to see whether you pass the threshold, but a loss from self-employment is not subtracted from wages. See self-employment tax.
Form 8959
Form 8959 has parts for wages, self-employment income, railroad retirement compensation, the total tax, and a reconciliation of what your employer withheld. You must file it if you owe the tax or if your employer withheld it, even if the amount withheld is more than you owe, which is how you claim the credit for the withholding. Attach it to your Form 1040, 1040-SR or 1040-NR.
Paying it during the year
You cannot ask for withholding labeled for this tax alone. But you can ask your employer for extra income tax withholding on Form W-4 (see Form W-4 withholding), and that amount counts toward your total tax. You can also make estimated tax payments, which you cannot designate for this specific tax. If a couple's wages are spread across two jobs, check at mid-year whether the combined total will pass the threshold.
Planning ideas
Since the tax depends on earned income and self-employment income, ideas are limited. Retirement plan contributions made through payroll generally reduce wages for income tax but not Medicare wages. Retirement deductions for self-employed people reduce income tax but do not lower self-employment earnings. Sit down with a professional before assuming that a strategy lowers this tax.
State considerations
The Additional Medicare Tax is a federal tax. State income tax is figured separately and does not use the Medicare thresholds. See our Illinois tax guide for state basics.
How we can help
We can estimate whether you and your spouse will cross the threshold, adjust withholding, prepare Form 8959 and reconcile withholding with your return. See tax planning or contact us.
Frequently asked questions
Does my employer match the Additional Medicare Tax?
No. The extra 0.9% is paid only by the employee or self-employed person. The employer pays its usual 1.45% share.
Why was no Additional Medicare Tax withheld even though we owe it?
Employers withhold only when wages from that employer exceed $200,000. Couples whose combined wages exceed $250,000 can owe the tax with no withholding at all.
Does the tax apply to capital gains or dividends?
No. Investment income can be subject to the separate 3.8% net investment income tax, which has its own thresholds.
Will the thresholds go up with inflation?
Not under current law. They are fixed dollar amounts.
Official sources
- IRS: Questions and answers for the Additional Medicare Tax
- IRS: Instructions for Form 8959 (2025)
- IRS: Topic no. 560, Additional Medicare tax
This page is a plain-language summary. The official source controls if there is any difference.
General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.