Medicare Tax Definition
What is Medicare Tax?
Medicare tax is a tax on wages that U.S. employers are liable to withhold from employees’ paychecks to cover the costs of the Medicare program. The Medicare tax rate is 2.9%; employers will need to withhold 1.45% from each employee’s payroll and contribute a matching amount. A base wage for Medicare tax doesn’t exist.
Together, Medicare and Social Security taxes form the FICA (Federal Insurance Contributions Act) taxes paid quarterly to the IRS.