Additional Medicare Tax
Also: Additional Medicare Tax, AMT Medicare, 0.9% Medicare surtax
A 0.9% federal tax on wages and self-employment income above $200,000 single or $250,000 married. Withheld by employers once an individual's wages cross $200,000, regardless of filing status.
The Additional Medicare Tax is a 0.9% federal tax on wages, self-employment income, and railroad retirement compensation in excess of the filer’s threshold: $200,000 for single filers, $250,000 for joint filers, and $125,000 for married filing separately. Employers withhold the 0.9% once an individual employee crosses $200,000 in a calendar year with that employer, without regard to spouse income or filing status. Filers reconcile on Form 8959.
Example: an engineer earns $410,000 in wages in a year. Her employer withholds the 0.9% on the $210,000 above $200,000, producing $1,890 of Additional Medicare Tax in withholding. If her spouse also earns $300,000, the couple’s joint threshold of $250,000 produces a smaller actual liability, and the excess withholding is refunded.
Common mistake: forgetting that the Additional Medicare Tax applies to RSU vest income and NSO exercise income, not just regular salary. A $1 million RSU vest creates roughly $9,000 of Additional Medicare Tax.
Additional Medicare Tax matters in every tech-employee paycheck once wages cross $200,000, and at tax filing for dual-income households whose combined threshold differs from per-employer withholding.