The Additional Medicare Tax on High Earners

Regular Medicare tax is simple in a way most payroll taxes are not: 1.45% of every dollar of wages, with no cap and no complications. The Additional Medicare Tax sits on top of that simplicity and breaks it, because it is the one payroll tax whose correct amount your employer genuinely cannot calculate on its own.

What is the Additional Medicare Tax?

It is an extra 0.9% tax on wages, self-employment income, and certain other compensation above a threshold that depends on your filing status, not just your income from one job. For 2026 the thresholds are:

Above the relevant threshold, the employee share of Medicare rises from 1.45% to 2.35% on the excess. There is no employer match on the extra 0.9%, which is unusual: for regular Social Security and Medicare, the employer pays a mirror amount. Here, it does not.

Why the withholding is often wrong, and it isn't a mistake

Employers are legally required to withhold the additional 0.9% once they personally have paid you more than $200,000 in the year, applying the single-filer threshold to everyone regardless of actual filing status. This is not an employer error, it is the rule: an employer cannot know your spouse's income, your combined household filing status, or whether you have a second job, so the law simply has every employer withhold on the flat $200,000 figure and lets the true reconciliation happen on your tax return.

This produces both directions of mismatch:

• A married couple filing jointly, each earning $180,000, has combined income of $360,000, well above the $250,000 joint threshold. But neither employer withheld anything extra, because neither individually paid over $200,000. The couple owes the tax as a lump sum when they file, not spread across the year through withholding.
• A single filer earning $220,000 at one job has $20,000 over the $200,000 threshold, and the employer correctly withholds the extra 0.9% on that $20,000. No surprise here, because a single filer with one employer is the case the withholding rule is actually built for.
• A married couple filing jointly where one spouse earns $210,000 and the other earns $30,000 has combined income of $240,000, below the $250,000 joint threshold. But the higher earner's employer withheld extra Medicare tax on the $10,000 above $200,000 anyway, because it applies the single-filer threshold regardless of filing status. This couple was over-withheld and gets money back on their return.

The rule is not designed to get the right answer through withholding alone. It is designed to get close, with the tax return doing the final correction in either direction. This is worth understanding before you assume a shortfall on your return means somebody made an error; usually nobody did.

How the true liability is calculated at filing

On your tax return, the actual Additional Medicare Tax owed is based on your combined Medicare wages (and self-employment income) against your actual filing status threshold, not against what any individual employer withheld. Form 8959 reconciles the two: it adds up all the Additional Medicare Tax actually withheld across every employer, compares that to what you actually owe based on your real threshold, and the difference either reduces your refund, adds to your bill, or, in the over-withheld case above, is credited back.

This reconciliation is separate from, but sits right beside, the more familiar Social Security wage base reconciliation that happens when somebody has two employers in a year and both withhold Social Security tax on the full amount they paid. Both are settled the same way, on the same general mechanism, but they run on entirely different thresholds and rates and should not be confused with each other.

If you are self-employed

The Additional Medicare Tax applies to self-employment income too, using the same thresholds, but there is no employer to withhold it in the first place. It is calculated and paid as part of your self-employment tax obligation, typically through quarterly estimated payments, using your net self-employment earnings.

One detail that matters if you have both a job and a side business: your threshold is applied once, across your combined wages and self-employment income together, not once for each. Somebody with $170,000 of wages and $60,000 of net self-employment income, filing single, has $230,000 of combined income against the $200,000 threshold, even though neither figure alone crosses it. The wages are counted first against the threshold, and the self-employment income fills the remainder, which is the same stacking order used for the Social Security wage base.

A worked example

A single filer earns $230,000 in wages from one employer during 2026.

That $270 is on top of the regular 1.45% Medicare tax, which continues to apply to the full $230,000 with no ceiling, unlike the Social Security portion of FICA. Regular Medicare tax on this filer's wages would be $3,335. The additional tax adds $270 to that, for a total employee Medicare bill of $3,605.

What counts toward the threshold?

The Additional Medicare Tax uses the same wage base as regular Medicare, which is broader than most people assume. It includes:

• Regular wages, bonuses and commissions
• Taxable fringe benefits
• Tips reported to your employer
• Certain nonqualified deferred compensation when it becomes taxable

It does not exclude pre-tax retirement contributions the way income tax withholding does. Deferring salary into a 401(k) reduces your income tax, but it does not reduce your Medicare wages or move you further from the Additional Medicare Tax threshold, exactly the same asymmetry that applies to the regular Social Security and Medicare tax base.

Can you ask your employer to withhold more?

Not specifically for the Additional Medicare Tax through a simple election the way you can adjust income tax withholding on a W-4. What you can do is submit a new Form W-4 requesting additional flat-dollar income tax withholding each pay period, and have that extra amount effectively cover the anticipated Additional Medicare Tax shortfall when you file. This is the most common fix for a married couple who know in advance, from the example above, that neither employer will withhold enough.

The alternative is quarterly estimated tax payments, which is the standard route for anyone with meaningful self-employment income or investment income alongside wages, and is worth coordinating with your overall estimated tax calculation rather than treating the Medicare shortfall as a separate payment.

How it relates to the Net Investment Income Tax

The Additional Medicare Tax is frequently confused with the separate 3.8% Net Investment Income Tax (NIIT), and it is worth being precise about the difference, because they use similar-sounding but different thresholds and apply to different kinds of income. The Additional Medicare Tax applies to wages and self-employment earnings. The NIIT applies to investment income, such as interest, dividends, and capital gains, above its own threshold. A high earner with both wage income and significant investment income can owe both taxes in the same year, on different pieces of their income, and mistaking one calculation for the other is a common filing error.

Why the thresholds feel like they never move

Unlike the Social Security wage base, which is indexed to average wages and rises most years, the $200,000 and $250,000 Additional Medicare Tax thresholds are not indexed for inflation at all. They have stayed at the same nominal figures since the tax was introduced. That means the population of filers crossing them grows a little every year purely from wage growth, with no change in real purchasing power, which is worth knowing if you are budgeting multiple years ahead and assuming the threshold will rise the way most tax figures do.

What if you are significantly under-withheld when you file?

Owing the Additional Medicare Tax as a lump sum, most commonly for the married-with-two-earners case above, is not itself a penalty. It is simply tax that was never withheld because no single employer had the information to withhold it. But if the shortfall is large enough, it can contribute to an underpayment penalty if your total withholding and estimated payments for the year fell short of the safe harbor thresholds that apply to your return overall.

The fix for a couple who know in advance that they will owe this every year is straightforward: one spouse requests additional flat-dollar withholding on Form W-4, calculated to cover the anticipated shortfall, rather than waiting to discover it at filing time and potentially facing a penalty on top of the tax itself. This is worth doing once, when the situation becomes predictable, rather than being surprised by the same shortfall every year it recurs.

How this compares to other payroll thresholds you might already know

It helps to place the Additional Medicare Tax next to the Social Security wage base, because they behave in almost opposite ways and people frequently mix them up.

Both are reconciled on your return when multiple employers are involved, but one is a ceiling that benefits high earners once crossed, while the other is a floor that costs them more once crossed. Confusing the two, assuming the wage base logic ("it stops once you hit the number") applies to Medicare, is a common and costly misunderstanding, since regular Medicare never stops and the additional 0.9% only ever adds on top.

The bottom line

If your wages from a single employer exceed $200,000, expect 0.9% extra Medicare withholding on the excess automatically, correctly calculated for a single filer with one job. If your situation is anything other than that (married with combined income near or above $250,000, two jobs, or a mix of wages and self-employment income) check the math yourself using Form 8959 or the paycheck calculator before assuming withholding has it covered, because in most of those cases it structurally cannot.