Medicare Tax Calculator 2025
Calculate your Medicare tax and Additional Medicare tax with current 2025 rates. Understand your FICA Medicare obligations and employer contributions.
2025 Medicare Tax Rates & Thresholds
Regular Medicare Tax
Additional Medicare Tax
Income Thresholds
Medicare Tax Calculator
Enter your income information to calculate Medicare taxes
Complete Medicare Tax Guide 2025
Master Medicare taxes with our comprehensive guide covering regular Medicare tax, Additional Medicare tax, and advanced planning strategies.
Medicare Tax Fundamentals
- Employee rate: 1.45% of all wages
- Employer rate: 1.45% of all wages
- Combined rate: 2.9% of all wages
- No wage base limit (unlike Social Security)
- Rate: 0.9% on income over thresholds
- Single filers: $200,000 threshold
- Married filing jointly: $250,000 threshold
- Married filing separately: $125,000 threshold
- No wage base cap (Social Security caps at $176,100)
- Additional Medicare Tax has no employer match
- Applies to all earned income types
- Self-employed pay both employee and employer portions
Net Investment Income Tax (NIIT)
- Rate: 3.8% on net investment income
- Same income thresholds as Additional Medicare Tax
- Applies to investment income, not wages
- Separate from Medicare tax but related
- Interest, dividends, and capital gains
- Rental and royalty income
- Income from passive activities
- Income from trading securities
- Wages, salaries, and self-employment income
- Distributions from qualified retirement plans
- Tax-exempt municipal bond interest
- Income from active business participation
Withholding and Estimated Taxes
- Regular Medicare: Withheld on all wages
- Additional Medicare: Starts when wages exceed $200,000
- Withholding based on individual wages, not household income
- No consideration for spouse's income in withholding
- May need estimated payments if under-withheld
- Married couples often under-withhold due to combined income
- Self-employed must make quarterly payments
- Consider safe harbor rules to avoid penalties
- Request additional withholding on Line 4(c)
- Useful for married couples with combined high income
- Can specify dollar amount per paycheck
- Review annually and after major life changes
Special Situations
- Each employer withholds based on wages paid
- May result in under-withholding of Additional Medicare Tax
- Consider additional withholding or estimated payments
- Reconcile total tax owed when filing return
- Pay both employee and employer portions (2.9%)
- Additional Medicare Tax applies to net SE income
- Make quarterly estimated tax payments
- Can deduct employer portion as business expense
- Subject to Medicare tax but not Social Security
- Additional Medicare Tax applies to railroad wages
- Tier 1 and Tier 2 taxes separate from Medicare
- Special withholding and reporting rules
Advanced Medicare Tax Planning Strategies
High-Income Tax Reduction Strategies
- 401(k) limit: $23,500 ($31,000 if 50+)
- 403(b) and 457(b): Same limits as 401(k)
- SEP-IRA: Up to 25% of compensation or $70,000
- Solo 401(k): Up to $70,000 ($77,500 if 50+)
- Individual coverage: $4,300 contribution limit
- Family coverage: $8,550 contribution limit
- Catch-up (55+): Additional $1,000
- Triple tax advantage: Deductible, grows tax-free, tax-free withdrawals
- Health insurance premiums (if self-employed)
- Dependent care FSA: Up to $5,000
- Commuter benefits: Up to $315/month
- Life insurance premiums (group term up to $50,000)
Income Timing and Deferral
- Non-qualified deferred compensation (NQDC)
- Defer income to lower-tax years
- Reduce current year Medicare tax exposure
- Consider employer financial stability
- Time bonus payments across tax years
- Consider ISO vs. NQSO exercise timing
- Evaluate restricted stock vesting schedules
- Plan around Medicare tax thresholds
- Time business income and expenses
- Consider installment sales for large gains
- Evaluate like-kind exchanges (1031)
- Plan equipment purchases for depreciation
Investment and NIIT Planning
- Hold investments longer than one year for capital gains rates
- Use tax-loss harvesting to offset gains
- Consider municipal bonds for high earners
- Maximize tax-deferred and tax-free accounts
- Hold tax-inefficient investments in tax-deferred accounts
- Keep tax-efficient investments in taxable accounts
- Use Roth accounts for high-growth investments
- Consider asset allocation across account types
- Active participation can avoid NIIT on rental income
- Real estate professional status eliminates NIIT
- Consider opportunity zones for capital gains deferral
- Use depreciation to offset rental income
Business Structure Optimization
- Reasonable salary subject to Medicare tax
- Distributions not subject to self-employment tax
- Must pay reasonable compensation to owner-employees
- Consider state tax implications
- Limited partners generally not subject to SE tax
- General partners subject to SE tax on all income
- Consider LLC with multiple members
- Evaluate guaranteed payments vs. distributions
- Employees: Employer pays half of Medicare tax
- Contractors: Pay full self-employment tax
- Consider total compensation package
- Ensure proper classification to avoid penalties
Medicare Tax Calculator FAQ
The regular Medicare tax rate is 1.45% for employees (2.9% total with employer match). There's also an Additional Medicare Tax of 0.9% on income over $200,000 for single filers, $250,000 for married filing jointly, and $125,000 for married filing separately.
No, there is no wage limit for Medicare tax. Unlike Social Security tax which caps at $176,100 in 2025, Medicare tax applies to all wages and self-employment income with no maximum limit.
Additional Medicare Tax is an extra 0.9% tax on wages, compensation, and self-employment income above certain thresholds. Only the employee pays this tax - there is no employer match. It applies to high earners to help fund Medicare.
Self-employed individuals pay both the employee and employer portions of Medicare tax (2.9% total) on their net self-employment earnings. They also pay Additional Medicare Tax of 0.9% on income over the thresholds, just like employees.
Employers must begin withholding Additional Medicare Tax when an employee's wages exceed $200,000 in a calendar year, regardless of filing status. If you're married and file jointly with combined income over $250,000, you may owe additional tax when filing your return.
Generally, no. Medicare tax is not refundable like excess Social Security tax can be. However, if too much Additional Medicare Tax was withheld based on your actual filing status and income, you may get a refund when you file your tax return.
Medicare taxes apply to wages, salaries, tips, bonuses, and self-employment income. They do not apply to investment income, rental income, or retirement distributions. However, high earners may pay Net Investment Income Tax (3.8%) on investment income.
You can reduce Additional Medicare Tax by maximizing pre-tax deductions like 401(k) contributions, HSA contributions, and health insurance premiums. These reduce your taxable wages and may keep you below the Additional Medicare Tax thresholds.