Taxation · Taxation

Additional Medicare tax

Verification 2026 Verified
tax year · reviewed 2026-08-19 · Draft for I. Ohu review

Every other employment tax is withheld at the rate the employee owes. This one is not. The employer withholds once wages from that employer pass one figure, while the employee’s liability is measured against a different figure that depends on filing status and on income the employer knows nothing about. The result is a mismatch in both directions, settled on Form 8959.

The rule

The tax. 0.9 percent of wages, and of self-employment income, above the threshold — imposed on the employee alone, with no employer match (IRC §§ 3101(b)(2) and 1401(b)(2))^TY2026 It applies to wages under § 3101(b)(2), to self-employment income under § 1401(b)(2), and to railroad retirement compensation under the parallel provision. There is no corresponding employer tax — the ordinary 1.45 percent hospital insurance tax has an employer match and this addition does not.

The threshold. $250,000 on a joint return, $125,000 for a married individual filing separately and $200,000 in any other case — the same figures as the net investment income tax, equally unindexed (IRC § 3101(b)(2)(A)–(C))^TY2026 Note that the married-filing-separately figure is half the joint figure, not half of the figure for a single filer.

Withholding is on a different trigger (IRC § 3102(f)(1)). an employer withholds only on wages it pays above $200,000, disregarding the spouse's wages and any other employer's — so withholding routinely fails to match the liability in both directions, and the difference is settled on Form 8959 (IRC § 3102(f)(1), (2))^TY2026 Three consequences follow. An employer withholds nothing for a joint-filing couple each earning just under the trigger, though together they are well over their threshold. It withholds on a married taxpayer filing separately by reference to the trigger rather than to that taxpayer’s much lower threshold, and under-withholds. And a single taxpayer with two employers each paying below the trigger has no withholding at all and a real liability.

Wages first, then self-employment income. The threshold applies to the combined amount, with wages taken first: for self-employment income the threshold is reduced — but not below zero — by the wages taken into account (IRC § 1401(b)(2)(B)). So there is one threshold, not two, and splitting income between employment and self-employment does not avoid the tax.

No deduction, either half. The additional tax is disregarded both in the § 1402(a)(12) reduction of net earnings and in the § 164(f) deduction for one half of self-employment tax (IRC § 1402(a)(12)(B)). It is the one component of self-employment tax that gets neither of the two halvings.

It is not the net investment income tax. The two share their threshold figures and nothing else. This one reaches earned income; § 1411 reaches investment income; and § 1411(c)(6) makes sure the same dollar is never in both.

Current figures

Item	Amount
Rate	0.9 percent of wages, and of self-employment income, above the threshold — imposed on the employee alone, with no employer match (IRC §§ 3101(b)(2) and 1401(b)(2))^TY2026
Threshold	$250,000 on a joint return, $125,000 for a married individual filing separately and $200,000 in any other case — the same figures as the net investment income tax, equally unindexed (IRC § 3101(b)(2)(A)–(C))^TY2026
Withholding trigger	an employer withholds only on wages it pays above $200,000, disregarding the spouse's wages and any other employer's — so withholding routinely fails to match the liability in both directions, and the difference is settled on Form 8959 (IRC § 3102(f)(1), (2))^TY2026

How it works in practice

Compute the liability from the return, not from the Forms W-2. Add wages, railroad retirement compensation and self-employment income; compare the total to the threshold for the filing status; take 0.9 percent of the excess.

Then subtract what was actually withheld. Whatever the employer took is a credit against the liability. If it withheld more than the taxpayer owes — the classic case being a single high earner in a household whose joint threshold is not reached — the excess comes back as an overpayment.

Then check the estimated tax position. A taxpayer who will owe this tax and will not have it withheld should either increase withholding or make estimated payments. It is a common cause of a small unexpected balance due, and of an underpayment addition on top of it.

The planning point is narrow but real: because withholding keys off a single employer’s wages, a two-earner couple or a taxpayer with several jobs will almost always be under-withheld. Asking for additional income tax withholding on a Form W-4 is the simplest fix, since additional withholding is credited against total liability without regard to which tax it was labelled for.

Wages and self-employment income together

Kwabena is single with $185,000 of wages and $35,000 of net self-employment income.

Neither source alone crosses the $200,000 threshold, and his employer withholds nothing because his wages are below the § 3102(f)(1) trigger. But the threshold applies to the combined $220,000. The excess is $20,000, and the tax is 0.9 percent of it — $180 — reported and paid with his return on Form 8959. The wages are counted first and reduce the threshold available to the self-employment income to $15,000, which produces the same answer by the other route.

Withheld too much, on a joint return

Amara earns $210,000 and her husband Tobias earns $65,000. Her employer withholds the additional Medicare tax on the $10,000 of her wages above $200,000 — $90.

Their joint threshold is $250,000 and their combined wages are $275,000, so their actual liability is 0.9 percent of $25,000, or $225. Credit for the $90 already withheld leaves $135 payable with the return. Had Tobias earned nothing, the same $90 would have been withheld against a liability of zero, and the $90 would have come back as part of their refund.

Two employers, no withholding, real liability

Sione is single and works for two unrelated companies, each paying $150,000.

Neither employer’s wages exceed $200,000, so under § 3102(f)(1) neither withholds anything — and § 3102(f)(1) expressly allows an employer to disregard other wages. His combined wages are $300,000, his threshold is $200,000, and he owes 0.9 percent of $100,000, or $900, entirely at filing. This is the same structural problem as excess social security withholding at 1.4.1.e, running in the opposite direction: there, two employers cause over-withholding; here, they cause none at all.

Withholding and liability use different figures. A fixed amount per employer for withholding; the filing status threshold for liability. They agree only by coincidence.

There is no employer match. The employer withholds and remits but pays nothing of its own.

The married-filing-separately threshold is half the joint figure, not half of the single figure.

One threshold, not two. Wages are counted first and reduce the threshold available to self-employment income, so splitting income between the two does not help.

Neither halving applies. The additional tax is outside both the § 1402(a)(12) base reduction and the § 164(f) deduction — unlike every other part of self-employment tax.

It can be over-withheld. A single earner above the withholding trigger in a household below the joint threshold gets the excess back; it is not a cost.

It is not the net investment income tax. Same thresholds, different base, and § 1411(c)(6) keeps the same dollar out of both.

The thresholds are not indexed. They have been the same figures since 2013.

How this has changed

Nothing has changed. Sections 3101(b)(2) and 1401(b)(2) were added by Pub. L. 111-148 § 9015 and amended by Pub. L. 111-152 § 1402(b), applying to remuneration received and taxable years beginning after 31 December 2012, and neither has been amended since. Pub. L. 119-21 did not touch them.

The point of currency is the same as for the net investment income tax: the thresholds are fixed dollar amounts in the statute with no indexing provision. Thirteen years on, figures set well above the median household income now catch a substantial number of two-earner professional households. Nothing in the law has moved; the incomes have.

One consequence deserves attention because it compounds each year. Because the § 3102(f)(1) withholding trigger is also fixed and applies per employer, the gap between what is withheld and what is owed widens as more taxpayers cross the liability threshold through combined income rather than through a single large salary. The mismatch is not a defect that will be corrected administratively — it is what the statute directs — so it should be planned around rather than waited out.

Exam focus

The computation is straightforward and the examiners test the mismatch rather than the arithmetic. Expect a fact pattern with two earners, or with wages plus self-employment income, where the answer requires combining amounts the employer never saw.

Know the two figures and which is which: the fixed per-employer amount for withholding, and the filing status threshold for liability. Know that the married-filing-separately threshold is half the joint one.

Know that there is no employer match, that wages are counted before self-employment income against a single threshold, and that the tax gets neither of the two halvings that apply to the rest of self-employment tax. And know that over-withholding is recovered on the return.

Check yourself

1. A single taxpayer has $185,000 of wages and $35,000 of self-employment income. What is the additional Medicare tax?

Answer: $180. The threshold applies to the combined $220,000, giving an excess of $20,000 taxed at 0.9 percent. Neither source alone crosses the threshold, and the employer withholds nothing because the wages are below the § 3102(f)(1) trigger.

2. A married couple filing jointly earn $210,000 and $65,000. The higher earner’s employer withheld the tax on wages above $200,000. What is payable with the return?

Answer: $135. Combined wages of $275,000 exceed the $250,000 joint threshold by $25,000, giving a liability of $225. The employer withheld 0.9 percent of $10,000, or $90, which is credited, leaving $135.

3. Two employers each pay a single taxpayer $150,000. How much do they withhold?

Answer: Nothing. IRC § 3102(f)(1) requires withholding only to the extent the taxpayer receives wages from that employer in excess of $200,000, and expressly permits the employer to disregard other wages. The taxpayer owes 0.9 percent of $100,000 at filing.

4. Does the additional Medicare tax on self-employment income enter the deduction for one half of self-employment tax?

Answer: No. The § 1401(b)(2) tax is disregarded both in the § 1402(a)(12) reduction of net earnings and in the § 164(f) deduction for one half of the tax. It is the only component of self-employment tax that receives neither halving.

5. A married taxpayer files separately with $210,000 of wages. Is the employer’s withholding enough?

Answer: No. The employer withholds on the $10,000 above $200,000, but the threshold for a married individual filing separately is $125,000 — half the joint figure — so the liability is 0.9 percent of $85,000. The difference is settled on Form 8959.

Change log

2026-08-19Initial draft. Sets out the IRC § 3101(b)(2) and § 1401(b)(2) 0.9 percent tax with its unindexed thresholds, the mismatch between the § 3102(f)(1) withholding trigger and the liability threshold, the absence of any employer match, the ordering rule between wages and self-employment income, and the relationship with the § 1411 net investment income tax.