What is Medicare Tax?

Medicare tax is a 1.45% tax on ALL wages with no cap (unlike Social Security). High earners pay an additional 0.9% Medicare surtax on wages exceeding $200,000 (single) or $250,000 (married filing jointly), bringing their total Medicare rate to 2.35%. This tax funds Part A of Medicare, which covers hospital insurance for people 65 and older and those with certain disabilities.