Medicare Tax Rate 2026: How Much You Pay & What It Funds

The Medicare tax rate 2026 applies to all earned income at 2.9%, consisting of 1.45% by the employee and another 1.45% by the employer. The self-employed (2.9% of both halves). A 0.9% Medicare surtax applies to income over specific thresholds to high earners. Medicare tax is not capped, as is Social Security tax. The rate is 1.45% of every dollar earned, regardless of how much you make, $40,000 or $4 million.

This guide outlines what Medicare's payroll tax pays for, the 2026 rates, who has to pay the extra Medicare tax, how it works for self-employed persons and where money goes to in Medicare's funding. Data are provided by the IRS, SSA, CMS and KFF. The article is updated on an annual basis in January with the latest rates. 

Medicare tax rate 2026: the standard rates

The Medicare tax rate for 2026 has not changed from prior years for most workers. Standard rates remain:

The 1.45% Medicare tax is part of FICA (Federal Insurance Contributions Act) along with the 6.2% Social Security tax. Together, the standard FICA rate for employees is 7.65%, with employers matching for a combined 15.3%. Self-employed workers pay the full 15.3% on their net self-employment income through SE (Self-Employment) tax on Schedule SE.

According to IRS guidance, unlike Social Security tax (which caps at $176,100 of wages in 2026), Medicare tax has no income limit. Every dollar of earned income is subject to the 1.45% rate.

What is Medicare tax used for?

What is medicare tax funding? The Medicare tax goes into the Hospital Insurance (HI) Trust Fund, which finances Medicare Part A (hospital coverage). When a Medicare beneficiary uses Part A for an inpatient hospital stay, skilled nursing facility, or hospice, it's the Medicare tax dollars that pay for it.

Other parts of Medicare are funded differently:

• Part A (hospital): Funded primarily by the Medicare payroll tax (1.45% from each side)

• Part B (medical): Funded ~25% by beneficiary premiums and ~75% by federal general revenues

• Part C (Medicare Advantage): Funded by combined Part A and Part B sources, paid to private insurers

• Part D (prescriptions): Funded by beneficiary premiums and federal general revenues

This is why Medicare tax rate decisions affect Part A solvency in particular. The HI Trust Fund's projected exhaustion date has been a recurring policy concern. According to the 2024 Medicare Trustees Report, the HI Trust Fund is currently projected to remain solvent through 2036.

Medicare tax additional: the 0.9% surtax for high earners

The Medicare tax additional is a 0.9% surtax that applies to wages and self-employment income above specific thresholds. It was introduced in 2013 as part of the Affordable Care Act and has not changed since. The thresholds are not indexed for inflation, which means more workers cross them every year.

If you exceed these amounts, then you will be charged the standard rate of 1.45% plus another 0.9%, or 2.35% per dollar of the income. The extra 0.9% is payable by the employer on payroll income over $200,000 for all filing statuses. Any difference is adjusted on your tax return on Form 8959 due to your actual filing position.

One very important fact to remember is that you are solely responsible for the extra Medicare tax! You get it deducted from your salary, but they do not match it. There is no counterpart to the 0.9% that is paid for by an employer.

High earners also will pay a related Net Investment Income Tax (NIIT) on investment income, also under the ACA, of 3.8%. NIIT is applicable to all income except the same amount of capital gains, dividends, interest or rental income. It is not a Medicare tax (it is paid to general revenues), but is talked about with the Medicare surtax, which was also enacted at the same time. 

2025 medicare tax rate vs 2026: what changed

The 2025 medicare tax rate and 2026 rates are functionally identical:

The medicare tax rate 2024 and earlier years also held at 1.45%/2.9%. The standard Medicare tax rate has been unchanged since 1986. The 0.9% additional Medicare tax thresholds have been unchanged since 2013.

What does change annually:

• The Social Security wage base ($176,100 in 2026, up from $168,600 in 2025)

• The Part A deductible ($1,684 in 2026, up from $1,632)

• The Part B premium ($185.00 in 2026, up from $174.70)

• The Part B deductible ($257 in 2026, up from $240)

• IRMAA brackets (slightly adjusted)

The Medicare tax rate itself is set in federal statute and doesn't change with annual inflation adjustments.

Medicare tax rate self employed: how it works

Medicare tax rate self employed works differently from W-2 employees. Self-employed workers pay both the employee and employer halves of Medicare tax themselves through Self-Employment Tax (SE tax) on Schedule SE.

The math:

• Self-employed Medicare tax rate: 2.9% (the full employee + employer rate)

• Plus Social Security: 12.4% on net self-employment income up to $176,100

• Total SE tax: 15.3% on the first $176,100, then 2.9% on income above that

Self-employed workers can deduct half of their SE tax (effectively the "employer half") from their gross income for federal income tax purposes. This doesn't reduce the SE tax itself, but it lowers your taxable income for income tax purposes.

The 0.9% additional Medicare tax also applies to self-employed workers above the same thresholds. It's calculated on net self-employment income above the filing-status threshold. Like with W-2 income, the 0.9% has no employer-matched counterpart for the self-employed.

What is Medicare tax for new workers?

The Medicare tax is one of the two FICA taxes (Social Security tax is the other) that are deducted from each paycheck for workers who join the workforce. Most pay stubs will not have a specific "Medicare tax" line. Search for Medicare, MEDIC or FICA Medicare. The 1.45% rate will be applied to your gross pay.

Those who work full time for 10 years (40 quarters) or longer are eligible for premium-free Part A coverage when they turn 65 if they pay Medicare tax. Individuals who have less than 40 quarters of Medicare-covered employment can also sign up for Part A, although they will be required to pay a monthly premium ($518 for anyone with less than 30 quarters). If the individual has never been employed, but their spouse was, then they may enroll in premium-free Part A based on their spouse's work history. 

Medicare tax and Medicaid

Medicare tax does not fund Medicaid. Medicaid is funded by combined federal and state general revenues, not by a dedicated payroll tax. The Federal Medical Assistance Percentage (FMAP) determines the federal share of Medicaid costs, which varies by state from 50% to 78%, with poorer states receiving higher federal matches. For more on how the two programs differ, see our Medicare vs Medicaid guide.