The 0.9% Additional Medicare Tax applies to wages above $200,000 (single filers) - employers must withhold it but do not pay a matching employer share.
Why the Additional Medicare Tax matters for employers
The Additional Medicare Tax was enacted as part of the Affordable Care Act and took effect in 2013. Unlike regular Medicare tax (1.45% employee, 1.45% employer), the 0.9% Additional Medicare Tax is paid only by the employee - there is no employer match.
Employers are required to withhold the Additional Medicare Tax from wages paid to an individual employee once wages from that employer exceed $200,000 in a calendar year. The $200,000 threshold applies per employer, per employee - it does not consider the employee's filing status or wages from other sources.
This creates a situation where some employees may have too little withheld (if they have two jobs each paying under $200,000 but combined wages exceed the threshold), and others may have excess withholding (if a married couple combined has wages below $250,000 but one spouse triggered withholding at $200,000). Employees reconcile on Form 8959 when filing their individual returns.
Once an employee's wages cross the $200,000 threshold, the employer withholds the additional 0.9% on all wages above that amount for the remainder of the calendar year. The employer's regular Medicare withholding of 1.45% continues on all wages.
The threshold for the Additional Medicare Tax varies by filing status: $200,000 for single filers, $250,000 for married filing jointly, and $125,000 for married filing separately. However, employers apply only the $200,000 threshold regardless of employee filing status.
How BEG handles Additional Medicare Tax withholding for clients
BEG Managed Payroll automatically tracks when each employee crosses the $200,000 threshold and applies the additional 0.9% withholding correctly as part of fully managed payroll at $25-$45 per employee per month. Learn about BEG Managed Payroll.
Frequently asked questions
Does the employer pay the 0.9% Additional Medicare Tax?
No. The Additional Medicare Tax is employee-only. Employers must withhold it but do not pay a matching 0.9% employer share.
What if an employee has wages from multiple employers?
Each employer withholds once wages exceed $200,000 from that employer only. If an employee works two jobs and neither alone crosses $200,000 but the combined total does, the employee pays the shortfall when filing their return.
When does the employer start withholding the Additional Medicare Tax?
Employers begin withholding once wages paid to that employee in the current calendar year exceed $200,000. The additional 0.9% applies to all wages above that amount for the rest of the year.
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About the author
Anthony Moretti is VP of Sales at Business Executive Group, where he builds BEG's managed payroll and HR service verticals for employers across Dallas-Fort Worth and nationwide. He writes the BEG Payroll Glossary to give employers plain-English answers on payroll and compliance.
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