Accounting Dictionary

Medicare Tax

Medicare tax is paid by nearly every American worker to finance Medicare and provide market place discounts for people buying Obamacare.

The tax is 1.45% on every worker’s salary. The employer matches this amount for a total of 2.9%. An additional .09% is paid by workers who have more than $200,000 in Medicare wages and married couples earning more than $250,000 in Medicare wages. There is also a 3.8% surtax on the lesser of net investment income or the excess of income over $200,000 for individuals and $250,000 for married couples. The two taxes aimed at high earners were passed to finance Obamacare.

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