What is Medicare Tax?
Medicare Tax is a tax which the employer and employee shares equally. You can withhold certain amount from an employee’s earning and make a contribution.
Medicare and Social Security Tax both make up the (FICA) Federal Insurance Contributions Act tax which benefits the public. Both medicare and social security tax comes under the employers and employees payroll taxes.
Medicare Taxes apply to a wide range of allowance which includes monthly earnings, commission, bonus.
How Much is Medicare Tax?
The employee medicare tax rate is 1.45% and the employer tax rate is also 1.45%. So, in total the whole medicare tax is of 2.9% only. And, only the employee portion of taxes are deducted from their paychecks.
How to Calculate Medicare Tax?
Medicare Taxes are the taxes which are automatically withheld from an employee’s paycheck. Employees pay 1.45% of their earnings to (FICA) Federal Insurance Contributions Act. Employers pay a total of 2.9% of their total earning. Self-employed individuals pay the entire 2.9% on their own.
For example, if you are an individual tax payer and your earnings is $250,000 then you will pay the basic 1.45% on $200,000 of your earning and then again 2.35% on $50,000 of your earning. So, in total you will pay $4,075 for the current year.
Also, See: Long-Term Disability Insurance Premium