Additional Medicare Tax 2026: The 0.9% Surtax Explained

What Is the Additional Medicare Tax?

The Additional Medicare Tax is a 0.9% surtax, effective since January 1, 2013 under the Affordable Care Act, that applies on top of the standard 1.45% Medicare tax for high earners. It applies to wages, compensation, and self-employment income above set thresholds — $200,000 for single filers and heads of household, $250,000 for married filing jointly, and $125,000 for married filing separately.

This tax is frequently confused with the separate 3.8% Net Investment Income Tax (NIIT), which the site covers in depth in our NIIT Guide. Both taxes were created by the same legislation and became effective the same day, use similar (though not identical) MAGI thresholds, and often apply to the same high-income taxpayer in the same year — but they tax completely different types of income. This guide explains exactly how the Additional Medicare Tax works, how employer withholding operates, and — critically — how it differs from NIIT so you don't confuse the two when reviewing your return.

What Income Is Subject to the Additional Medicare Tax?

Per IRS guidance, the Additional Medicare Tax applies to Medicare wages and compensation (as reported in Box 5 of Form W-2), self-employment income, and railroad retirement (RRTA) compensation — once the total for the year exceeds the threshold for your filing status. Unlike the standard 1.45% Medicare tax, which applies to every dollar of Medicare wages from the first dollar with no cap, the Additional Medicare Tax only kicks in above the threshold, and it applies to the excess amount only, not the entire income.

Self-employed individuals pay the Additional Medicare Tax on self-employment income above the threshold as part of their self-employment tax calculation, but — unlike the regular 2.9% Medicare portion of self-employment tax — the Additional Medicare Tax is not eligible for the usual self-employment tax deduction, since it's explicitly excluded from that calculation.

How Employer Withholding Works

Employers are legally required to withhold the Additional Medicare Tax once an employee's wages from that employer alone exceed $200,000 in a calendar year — per the IRS, this withholding requirement applies "without regard to filing status," meaning the employer withholds based purely on the $200,000 single-employer threshold, even if the employee is married filing jointly (where the actual threshold is $250,000) or married filing separately (where it's $125,000). There is no employer-paid match for this 0.9% portion — unlike the standard 1.45% Medicare tax, which employers match dollar-for-dollar, the Additional Medicare Tax is entirely an employee-side withholding.

This creates two common mismatch scenarios reconciled on Form 8959 at tax filing time:

• Married filing jointly with two moderate incomes. If each spouse earns $150,000 (combined $300,000, well above the $250,000 MFJ threshold), neither employer withholds any Additional Medicare Tax, because neither spouse individually exceeds the $200,000 per-employer trigger. The couple owes 0.9% × $50,000 (the amount over $250,000) = $450 as additional tax due when filing.
• Single filer with one high-paying job. An employee earning $220,000 from one employer will have Additional Medicare Tax withheld on the $20,000 above $200,000 — which lines up correctly with the $200,000 single-filer threshold, so no reconciliation is needed in this simple case.
• Married filing separately. A spouse earning $180,000 has no employer withholding (below the employer's $200,000 trigger), but owes 0.9% × $55,000 (the amount over the $125,000 MFS threshold) = $495 when filing, since the employer threshold doesn't match the lower MFS statutory threshold.

Form 8959 reconciles all of this: it compares your actual liability (based on your real filing-status threshold and total income across all employers/self-employment) against the amount your employer(s) actually withheld, and calculates any additional tax due or, less commonly, a credit if withholding exceeded what was actually owed.

Additional Medicare Tax vs. NIIT: How Are They Different?

These two surtaxes are the most commonly confused provisions in the tax code for high earners, because they were created by the same law, took effect the same day (January 1, 2013), share the same basic $200,000/$250,000/$125,000 threshold structure, and both feed into the general concept of "paying more Medicare-related tax as a high earner." But per the IRS, they are entirely separate taxes that apply to different types of income, and you can owe both in the same year on the same tax return without any overlap or double-counting:

The thresholds happen to be identical between the two taxes, which is part of why they're so often confused — but the income each one measures is completely different. A retiree living entirely off investment income and Social Security, with $0 in wages, could owe substantial NIIT but zero Additional Medicare Tax. A high-earning employee with no investment income could owe substantial Additional Medicare Tax but zero NIIT.

Worked Example: A High Earner With Both Wages and Investment Income

Scenario: A single filer earns $260,000 in wages from one employer and also has $40,000 in net investment income (dividends and capital gains) for the year. Total MAGI: $300,000.

The employer in this example would have already withheld $540 in Additional Medicare Tax (since $260,000 exceeds the employer's $200,000 withholding trigger and matches the single-filer statutory threshold exactly), so no additional amount would be due on Form 8959 for that portion. The $1,520 in NIIT, however, is never withheld by anyone — it must be paid through quarterly estimated tax payments or settled when the return is filed, reported on Form 8960.

Why Aren't the Thresholds Adjusted for Inflation?

Unlike most tax brackets and thresholds — which the IRS adjusts annually for inflation under Internal Revenue Code provisions requiring cost-of-living adjustments — the Additional Medicare Tax thresholds ($200,000/$250,000/$125,000) are fixed directly by the statute that created the tax and have not changed since the tax took effect in 2013. This means more taxpayers become subject to the tax every year simply because wages rise with inflation and normal career progression, while the dollar threshold stays completely flat. The same fixed-threshold design applies to the NIIT thresholds, which is one of the few structural similarities the two taxes share.