The Additional Medicare Tax is short, specific, and easy to get wrong. It’s a flat 0.9% on wages over $200,000 paid to a single employee by a single employer in a calendar year. The employer does not match it. The threshold is per-employer, not per-employee, and it does not care about the employee’s filing status, other income, or spouse. The rules for employers are simpler than the rules for employees — but the number of questions payroll pros see on this topic suggests otherwise.
This page walks through the employer withholding obligation, explains the common confusion with the filing-status thresholds, and shows how Additional Medicare Tax interacts with the rest of FICA.
The employer rule, in one sentence
Once a single employer has paid a single employee more than $200,000 in Medicare wages during the calendar year, the employer must withhold an additional 0.9% from every dollar of Medicare wages paid to that employee for the rest of the year.
That’s it. No matching. No lookup to the employee’s Form W-4. No consideration of whether the employee is married, single, filing separately, or has another job. The $200,000 threshold applies to the wages paid by this employer only.
What “Additional” is on top of
The Additional Medicare Tax sits on top of the regular 1.45% Medicare tax:
| Tax | Rate | Wage base | Matched by employer? |
|---|---|---|---|
| Social Security | 6.2% | First $184,500 (2026) | Yes |
| Medicare | 1.45% | All wages | Yes |
| Additional Medicare | 0.9% | Wages over $200,000 from this employer | No |
The employer pays its regular 1.45% match on all wages — including the wages above $200,000 — but not the 0.9% surtax. The surtax is an employee-only obligation, collected through withholding.
Why there are two numbers in every article about this tax
Read any article on Additional Medicare Tax and you’ll see both $200,000 and $250,000. They are different thresholds for different people:
- $200,000 is the employer’s withholding threshold. Crosses this line on a per-employer, per-employee basis.
- $250,000 is the filing-status threshold for married-filing-jointly employees. This is the point at which the employee actually owes the tax on their personal Form 1040.
- $125,000 is the filing-status threshold for married-filing-separately employees.
Because employers have no way of knowing an employee’s filing status or other income, the law handed employers a single bright-line rule ($200,000, always) and then let the employee reconcile on their own tax return via Form 8959. An employee with combined household income below $250,000 but single-employer wages over $200,000 will have had too much withheld — they claim a credit on Form 1040. An employee with two jobs, each paying $150,000, has no employer withholding but owes the tax on $50,000 of wages over the $250,000 filing-status threshold — they pay it through their personal return.
How to compute it on a paycheck
Once an employee’s year-to-date Medicare wages from your company cross $200,000, withhold an additional 0.9% from every dollar of Medicare wages paid to that employee for the rest of the year.
Example. An employee has year-to-date Medicare wages of $198,000 going into a pay period. This period’s Medicare wages are $6,000, bringing the YTD to $204,000.
- The first $2,000 of this paycheck ($198,000 → $200,000) is subject to the regular 1.45% Medicare tax only.
- The next $4,000 ($200,000 → $204,000) is subject to 1.45% plus an additional 0.9%, for an effective Medicare withholding rate of 2.35% on that portion.
Withholding for the period: ($6,000 × 1.45%) + ($4,000 × 0.9%) = $87.00 + $36.00 = $123.00.
What trips people up
- “The employer matches the 0.9%.” No. The employer does not match Additional Medicare Tax. Only the regular 1.45% Medicare.
- “We should withhold only if we know the employee’s household income is over $250,000.” No. Employers withhold at $200,000 regardless of filing status, other income, or household composition. Employee reconciles on Form 8959.
- “The threshold applies across all our employees combined.” No. The threshold is per-employee, per-employer.
- “Does the SS wage base of $184,500 affect this?” No. The SS wage base tells you when Social Security stops being withheld (6.2% on the first $184,500 only). Additional Medicare Tax has nothing to do with it — Medicare has no wage base cap, and the 0.9% starts at $200,000 independently.
- “If an employee switches employers mid-year, do we count the prior employer’s wages?” No. Each employer starts the $200,000 clock at zero. This is actually an area where an employee earning $190,000 at Employer A and $190,000 at Employer B would have no employer withholding — despite owing Additional Medicare Tax on their personal return.
Reporting on Form 941 and the W-2
- Form 941: Report the additional 0.9% on Line 5d of Form 941 (Taxable wages subject to Additional Medicare Tax Withholding).
- Form W-2: Additional Medicare Tax withheld is included in Box 6 (Medicare tax withheld) along with the regular 1.45%. There is no separate W-2 box for the 0.9% portion — it’s lumped into Box 6.
Frequently asked questions
At what wage threshold must an employer begin withholding Additional Medicare Tax?
$200,000. Employers must begin withholding the 0.9% Additional Medicare Tax once wages paid to an individual employee exceed $200,000 in a calendar year, regardless of the employee’s filing status.
Does the employer match the 0.9% Additional Medicare Tax?
No. Unlike regular Medicare tax (1.45%), the Additional Medicare Tax is employee-only. The employer has no matching obligation.
What if the employee has wages from two employers that don’t each exceed $200,000?
Neither employer has a withholding obligation. The employee may still owe Additional Medicare Tax on their personal return if combined income exceeds the applicable filing-status threshold ($250,000 MFJ, $200,000 single, $125,000 MFS). They reconcile on Form 8959.
How is Additional Medicare Tax reported on Form 941?
On Line 5d — “Taxable wages and tips subject to Additional Medicare Tax Withholding.”
Is Additional Medicare Tax withholding shown separately on the W-2?
No. It’s included in Box 6 (Medicare tax withheld) along with the regular 1.45% Medicare tax. The employee uses Form 8959 to reconcile on their personal return.
Do 401(k) deferrals reduce the $200,000 threshold?
No. Traditional 401(k) deferrals reduce federal income taxable wages (Box 1) but not Medicare wages (Box 5). The $200,000 threshold is measured against Medicare wages, so the 401(k) deferral does not affect when the threshold is crossed.
Keep learning
- W-2 Box 12 Codes Explained — how retirement deferrals affect Box 5 (Medicare wages)
- The SECURE 2.0 Enhanced 401(k) Catch-Up for Ages 60–63
- 2026 Payroll Figures Quick Reference
Practice with PrepToPay
Additional Medicare Tax is a perennial FPC and CPP exam topic — usually in calculation questions that stress-test whether candidates know the $200,000 employer threshold vs. the $250,000 filing-status threshold. PrepToPay’s bank covers both angles with full worked examples. Start your 14-day free trial on FPC or CPP. A valid payment method is required at signup; you will not be charged during the trial. Reference is $9.99/month with no trial.
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