Medicare Tax Definition
Medicare tax is a tax on wages that U.S. employers are liable to withhold from employees’ paychecks and contribute to cover the costs of the Medicare program.
Medicare Tax Extended Definition
The Medicare tax rate is 2.9%. Employers need to withhold 1.45% from each employee’s payroll and contribute a matching amount. There is no wage base for Medicare. However, there is an additional Medicare tax of 0.9% that employers may need to withhold from employee wages.
Together, Medicare and Social Security taxes form the FICA (Federal Insurance Contributions Act) taxes paid quarterly to the IRS.
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Last Updated By
Rachel Blakely-Gray | Jun 15, 2023