---
title: "What is Medicare tax? | Additional Medicare Tax | ADP"
description: "Understanding Medicare tax is important for both employers and employees. Get info about Medicare tax rates, additional Medicare tax, resources, and more."
---

FAQ

# What is Medicare tax?

1.  [Payroll Tax](https://www.adp.com/resources/tools/tax-guides-and-forms/state-and-local-tax-guides/state-tax-guide)
2.  What is Medicare Tax?

The Medicare tax is a percentage of gross wages that all employees, employers and self-employed workers must pay to fund Medicare. In accordance with the [Federal Insurance Contributions Act](/resources/articles-and-insights/articles/w/what-is-the-federal-insurance-contributions-act) (FICA), employers are required to withhold the correct amount of Medicare tax and [Social Security tax](/resources/articles-and-insights/articles/w/what-is-the-social-security-tax) from every paycheck and forward it to the government on time. Failure to do so can result in significant penalties.

## What is additional Medicare tax?

With the passage of the Affordable Care Act (ACA), the United States government mandated an additional Medicare tax for high-income earners. Additional Medicare Tax is a surtax applied to wages, railroad retirement (RRTA) compensation, and self-employment income.

Once an employee earns more than the threshold, employers are responsible for withholding additional Medicare tax on those wages. Employers do not have a responsibility to contribute to the additional Medicare tax rate though there are other [taxes employers do pay](/resources/articles-and-insights/articles/w/what-federal-state-and-local-taxes-are-employers-required-to-pay).

For more information, please visit the [IRS website for Additional Medicare Tax FAQs](https://www.irs.gov/businesses/small-businesses-self-employed/questions-and-answers-for-the-additional-medicare-tax).

## How do self-employed individuals pay Medicare tax?

In addition to income tax, people who work for themselves must pay self-employment tax, or SE tax. It combines the Social Security and Medicare taxes withheld from the pay of most wage earners.

## What are taxable wages?

[Taxable wages](/resources/tools/tax-guides-and-forms/w2-taxable-wages) are salaries paid to an employee that by law, must have taxes withheld. Alternatively, there are non-taxable wages that are not subject to tax withholding.

## What wages are subject to Medicare tax?

All covered wages are subject to Medicare tax and there is no wage base limit. For more information, see [Publication 15, (Circular E), Employer’s Tax Guide from the IRS](https://www.irs.gov/publications/p15).

![ADP Editorial Team](/-/media/adp/resourcehub/images/authors/resourcehub_headshot_defaultlogo_250w_en.png?h=250&iar=0&w=250&rev=bd3d17f5038e4ff3aef554d2642143cf&hash=52D2290FEA29314404E1E73B03D0D26D)

[ADP Editorial Team](/resources/authors/a/adp-editorial-team)The ADP editorial team is comprised of human resource professionals with extensive experience solving complex HR challenges for businesses of all sizes.

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