How the Medicare Tax Rate Changed Between 2013 and 2019

The Medicare tax price for 2019 is one thing the IRS determines, and the quantity is topic to vary. These taxes are solely relevant to the earnings you earn, not a property or inheritance earnings.

Medicare taxes are a payroll tax; typically, an employer and an worker each contribute to the tax. Nonetheless, in conditions of self-employment, chances are you’ll be answerable for the full quantity because you’re each the employer and the worker.

There is not a wage base restrict for Medicare taxes, all wages are topic to the tax.

Medicare Tax Rate

The Medicare Tax price for 2019 is 1.45%. Nonetheless, the Federal Insurance coverage Contributions Act (FICA) tax price is the mixture of the SSA tax price of 6.2% and the Medicare Tax price; the complete FICA will likely be 7.65% for 2019.

The utmost SSA tax quantity for workers and employers is $8, 239.80 in 2019. For these counting on self-employment, the most SSA tax is $16, 479.60 for 2019.

All wages over $200,000 in 2019 can pay an additional 0.9% Medicare tax withholding on workers’ wages, employers don’t pay this tax. The self-employment tax price is barely larger at 15.3%; this is the mixture of the 12.4% SSA tax price and the 2.9% Medicare tax price.

Tax Brackets

Yearly the IRS makes adjustments to tax brackets. Nicely, we’ve the breakdown of taxes due in April 2020.

These are earnings tax brackets for federal earnings taxes, not Medicare tax charges. These are the charges that mirror the present 2019 tax 12 months and these numbers relate to the tax return you’re going to file in 2020.



Earlier than you grow to be overwhelmed with these numbers let’s go over how your earnings tax will get damaged down. For a single filer making $85,000 a 12 months, you don’t pay 24% on the complete $85,000.

Fortunately it goes extra like this:

  • $9,700 of your earnings has a 10% tax
  • $29,775 has a 12% tax
  • $44,724 has a 22% tax
  • $801 has a 24% tax

In fact, as you may see from the chart above, these numbers can change relying on submitting standing. These numbers solely apply to federal IRS earnings tax brackets; contact your state to learn how your earnings is domestically taxed.

Tax deductions can scale back the quantity of earnings your topic to obtain a tax. A tax credit score can scale back the quantity of tax you owe, not change the tax bracket you fall into.

Do you know Medicare premiums are tax-deductible!

Social Safety Tax Restrict

In 2019, there is no requirement to pay Social Safety taxes on the earnings you earn over $132,900. This is the Social Safety wage base.

So, irrespective of how a lot cash you earn, you’ll by no means pay greater than $8,240 in Social Safety taxes. Nonetheless, this wage base can improve yearly.

The Medicare tax you should pay on all earnings you earn. Additionally, in case your earnings is over $200,000 ($250,000 for {couples} submitting collectively) the Medicare tax charges rise to 2.35%.

Social Safety Tax Rate

The Social Safety Tax price is 6.20% of your payroll that goes in direction of funding the program. These which can be self-employed must pay double, although with correct deductions you possibly can reduce that in half.

Basically you pay into the program when you work and if you retire the program pays you. Though, many individuals surprise how lengthy Social Safety will final.

Extra Medicare Tax Rate

The Reasonably priced Care Act topics excessive wage earners to pay a further Medicare payroll tax of 0.9% on earned earnings. All US workers should pay the Medicare tax; this goes for everybody no matter citizenship or residency standing of the employer or the worker.

Single filers with an earnings of over $200,000 will likely be topic to a further Medicare Tax. Married people submitting individually can pay a further tax if earnings is over $125,000. Nonetheless, if married and submitting collectively, you’re topic to a tax when earnings combines to succeed in over $250,000.

This extra Medicare tax price is a Medicare surtax totaling 2.35% (1.45% + 0.9%). This will likely be added to the Social Safety tax price and your state earnings taxes.

Understanding the Medicare Tax

The proportion of earnings that goes in direction of your Medicare tax is 1.45% and employers match the price workers pay. Nonetheless, self-employed people pay the full  2.9%.

Medicare taxes are calculated on an worker’s gross earnings minus any non-taxable objects, and not using a most on wages.

Since 2013, you should pay a 3.8% Medicare tax price on all or a few of your internet funding earnings when the complete quantity exceeds the earnings thresholds. This is the Web Funding Earnings Tax; satirically, this goes into the authorities’s Normal Fund and never into Medicare.

The underside line is many individuals solely pay that 2.9% flat tax price; nonetheless, high-income earners with funding earnings might find yourself paying greater than this proportion.

Do I Need to Pay Medicare Taxes if I’m on Medicare

Legal guidelines require you to pay Medicare taxes on all earnings for so long as your an worker. So, for those who work and obtain Medicare, you’ll nonetheless pay Medicare taxes.

Additionally, you should pay SSA taxes and FICA taxes on all earned earnings irrespective of your age.

Save Cash with a Medicare Complement Coverage

Taxes is usually a ache, however healthcare protection doesn’t must be! Medicare Complement insurance policies offer you a set premium, in trade for low out of pocket prices.

These Medigap insurance policies offer you the freedom to see any physician in the United States that accepts Medicare. Additionally, when Medicare approves a service, the Medigap firm should cowl that service.

To decrease your out of pocket prices and have predictable healthcare bills, name certainly one of our licensed brokers at the quantity above. You possibly can fill out an internet price comparability type and certainly one of our Medicare specialists will likely be in contact with you later!


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