What Is the Additional Medicare Tax?

The Additional Medicare Tax is a 0.9% tax on Medicare wages above a set threshold, paid by the employee on top of the regular Medicare tax. Employers must withhold it once an employee’s wages pass $200,000 in a calendar year, and there is no employer match. The tax is also commonly called the Medicare surtax.

How the Additional Medicare Tax Works

The tax applies to the same earnings subject to regular Medicare tax, including tips and taxable noncash fringe benefits. It also covers railroad retirement compensation and self-employment income. It does not apply to investment income.

Social Security and Medicare taxes together make up FICA, and the Additional Medicare Tax falls under the Medicare portion. Self-employed individuals pay it on net earnings above their threshold, and no portion of it is deductible.

Social Security tax stops at the Social Security wage base, but Medicare tax has no wage cap. The extra 0.9% applies once earnings cross the threshold for the employee’s filing status.

These thresholds have stayed the same since the tax began in 2013 because they are not indexed. For 2026, the thresholds are unchanged.

To calculate the tax, multiply earnings above the applicable threshold by 0.9%. Because employer withholding follows a flat $200,000 trigger while liability follows filing status, the two can differ:

• Withholding exceeds liability: If spouses earn $210,000 and $25,000 and file jointly. One employer withholds 0.9% on $10,000, or $90. Their combined $235,000 falls below the $250,000 threshold, so the $90 is credited on their individual return.
• Liability exceeds withholding: If spouses each earn $150,000. Neither employer withholds, but their combined $300,000 exceeds the threshold by $50,000, so they will be under withheld by $450 on their individual return.

What Employers Should Know

The Additional Medicare Tax follows its own rules alongside other employer payroll taxes.

• Start in the right pay period. Withholding begins in the pay period when an employee’s wages from the employer pass $200,000 and applies only to the amount above it. No notice to the employee is required, and the wage count resets each January 1.
• Count only the wages paid by that employer. The trigger ignores filing status, a spouse’s income, and other employers.
• Decline special requests. Employers cannot stop withholding at an employee’s request or add withholding specifically for this tax. Employees who expect a larger bill can request additional income tax withholding on Form W-4.
• Report on the correct lines. The tax goes on Form 941 line 5d (Form 944 line 4d). On Form W-2, it is combined with regular Medicare tax in Box 6.
• Know where liability sits. An employer that fails to withhold is liable for the tax unless the employee pays it.
• Correct errors through the IRS process. Errors are generally fixed on Form 941-X. The IRS Questions and Answers explain the adjustment rules.

How It Appears on a Pay Stub and Form 8959

Pay stub labels vary by provider. Common versions include “Medicare employee additional tax,” “Medicare employee addl tax,” and “FED ADDL MED TAX.” Any of these means 0.9% was withheld on wages above $200,000 from that employer. At tax time, employees use Form 8959 to figure their actual liability, and any over-withholding is credited against the total tax on the return.

Additional Medicare Tax vs. Net Investment Income Tax: Which Is the Medicare Surtax?

Both taxes are sometimes called the “Medicare surtax,” which causes confusion. The Additional Medicare Tax is 0.9% on earned income, such as wages and self-employment income, and employers withhold it through payroll. The Net Investment Income Tax is a separate 3.8% tax on certain investment income that individuals settle on their return. A taxpayer can owe one, both, or neither.

How Paychex Can Help

A threshold that applies per employee, per employer, and per pay period adds one more detail to an already full payroll calendar. Paychex payroll calculates and withholds payroll taxes and handles filing and deposits, so businesses with higher-paid employees don’t have to track year-to-date wages or reporting lines by hand. Payroll and finance teams get accurate withholding without the extra monitoring.