Additional Medicare Tax (0.9%): A Guide for High Earners

What Is the Additional Medicare Tax?

The Additional Medicare Tax is a 0.9% surcharge on earned income, introduced by the Affordable Care Act and effective since 2013. It applies to wages, self-employment income, and railroad retirement (RRTA) compensation above your filing-status threshold.

The key word is earned. This surtax only touches money you work for. It does not apply to interest, dividends, capital gains, or rental income.

That distinction trips up a lot of high earners, because the ACA created two separate surtaxes in the same year. The difference:

• 0.9% Additional Medicare Tax: applies to earned income (wages and self-employment).
• 3.8% Net Investment Income Tax (NIIT): applies to investment income (interest, dividends, capital gains, passive income).

They share similar income thresholds, which is why people mix them up, but they are different taxes on different money. This article covers the 0.9% surtax on your paycheck and self-employment income. If you understand how the base Medicare tax works, this is the layer that sits on top of it. Our guide to FICA taxes walks through that base 1.45% and the 6.2% Social Security tax if you want the full picture first.

Who Pays It? The 2026 Income Thresholds

You owe the Additional Medicare Tax once your Medicare wages or self-employment income cross the threshold for your filing status. These amounts are set by statute and have not changed since 2013.

2026 Additional Medicare Tax Thresholds

Here is a catch that surprises people: the Social Security wage base rises every year, but these Additional Medicare Tax thresholds do not. It is easy to assume both adjust for inflation. They do not. The $200,000, $250,000, and $125,000 figures are the same in 2026 as they were more than a decade ago.

The tax applies to Medicare wages (Box 5 of your W-2), self-employment income, and RRTA compensation. RRTA is figured separately and is not combined with your other wages.

How It’s Calculated: The 1.45% + 0.9% = 2.35% Math

Start with the base. All Medicare wages are subject to the standard 1.45% Medicare tax, with no income cap. The 0.9% surtax then applies only to the portion of earned income above your threshold.

So the marginal rate on wages above your line is 2.35%. Below the line, it stays at 1.45%. Here is the stacking at a glance.

Example 1: Single Filer Earning $240,000

A single filer crosses the $200,000 threshold. The surtax applies to the $40,000 above it.

• Income above threshold: $240,000 - $200,000 = $40,000
• Additional Medicare Tax: $40,000 x 0.9% = $360

Example 2: Married Couple Earning $300,000 Combined

Two spouses each earn $150,000. Neither hits $200,000 alone, but their combined wages of $300,000 clear the $250,000 joint threshold.

• Combined wages above threshold: $300,000 - $250,000 = $50,000
• Additional Medicare Tax: $50,000 x 0.9% = $450

Notice the twist here: neither employer withheld a cent of the surtax, because neither spouse individually reached $200,000. The couple still owes $450. More on that gap in the next section.

Example 3: Married Filing Separately at $180,000

The separate threshold is only $125,000, the lowest of the group. A spouse filing separately with $180,000 in wages owes on $55,000.

• Income above threshold: $180,000 - $125,000 = $55,000
• Additional Medicare Tax: $55,000 x 0.9% = $495

Want to see this on your own numbers instead of a worked example? Pay44 calculates your base Medicare tax plus the 0.9% surtax above your filing-status threshold, alongside federal and state withholding, so you can check the hit before it shows up on a pay stub.

Why Your Paycheck Withholding May Not Match What You Owe

This is the part that surprises people. Your employer follows one rule, and your tax return follows another.

By law, an employer must start withholding the 0.9% surtax once it pays you more than $200,000 in a calendar year. The employer does this without regard to your filing status, your spouse’s income, or your other jobs. It only sees the wages it pays you.

Your actual liability, though, depends on your filing status and total household earned income. That mismatch cuts two ways.

When You Owe More Than Was Withheld

Go back to the $300,000 couple. Each spouse earns $150,000, so neither employer withholds any surtax. At tax time the couple still owes $450 on the $50,000 above their $250,000 joint threshold. That is a balance due nobody saw coming, a classic dual-income surprise.

When Too Much Was Withheld

Now flip it. Say you are married filing jointly, you earn $210,000, and your spouse earns nothing. Your employer withheld the surtax on the $10,000 above $200,000, about $90. But your household is under the $250,000 joint threshold, so you owe zero. That $90 comes back to you as part of your refund.

Either way, the numbers get squared up when you file. The reconciliation happens on Form 8959, which we cover below.

Self-Employment and Multiple Jobs

If you have self-employment income, or more than one employer, the math needs one more step.

Wages Come First and Shrink the Threshold

When you have both wages and self-employment income, wages are counted first. Your Medicare wages then reduce your threshold dollar for dollar (but never below zero) before the 0.9% applies to self-employment income.

The IRS example makes it concrete. A single filer has $130,000 in wages and $145,000 in self-employment income:

• Threshold starts at $200,000.
• Reduce it by $130,000 in wages: $200,000 - $130,000 = $70,000 remaining threshold.
• Self-employment income above that remaining threshold: $145,000 - $70,000 = $75,000.
• Additional Medicare Tax on SE income: $75,000 x 0.9% = $675.

If you are fully self-employed, the surtax stacks on the Medicare portion of your self-employment tax. Our FICA and SECA breakdown covers how that base self-employment tax works.

Multiple Employers

Each employer only withholds the surtax on the wages it pays above $200,000. If you have two jobs paying $120,000 each, neither reaches $200,000, so neither withholds. Combined, you are at $240,000 as a single filer and owe on $40,000. You settle that at filing time.

Filing: Form 8959 and How to Plan Ahead

The Additional Medicare Tax is computed and reconciled on Form 8959, which you file with your Form 1040. The form has five parts. In plain terms:

• Parts I-III figure the surtax on wages, self-employment income, and RRTA compensation.
• Part IV totals the tax you owe.
• Part V reconciles the amount your employer already withheld. This is where over-withholding becomes a refund and under-withholding becomes a balance due.

You need to file Form 8959 if your Medicare wages or self-employment income exceed your threshold, or if your employer withheld the surtax (even if you turn out not to owe it).

Planning Ahead

A few practical notes so the surtax does not catch you off guard:

• Dual-income couples, expect a balance due. If your combined wages clear $250,000 but neither of you individually hit $200,000, plan for a bill your employers never withheld.
• You cannot earmark estimated payments for this tax. Estimated tax payments apply to your overall liability, not to the Additional Medicare Tax specifically. Bump up your estimates or adjust withholding if you expect a shortfall.
• Model it before year-end. Run your salary, filing status, and second job through the Pay44 paycheck calculator or browse the other paycheck tools to see the number ahead of April.