2023 Medicare Tax Rate

The Medicare tax rate for 2023 is 2.9%. Typically, the Medicare tax rate is split equally between an employee and their employer, meaning you will forfeit 1.45% of your earnings and your employer tax rate will also be 1.45%. 

The Medicare tax is typically deducted from your paycheck automatically, along with a Social Security tax. Together, these two taxes make up what is known as the Federal Insurance Contributions Act (FICA) tax.

Do Higher Income Earners Pay an Additional Medicare Tax?

Medicare beneficiaries who earn a higher income are charged an Additional Medicare Tax of 0.9%. This tax is the sole responsibility of the individual. The individual’s employer is not responsible for any additional Medicare taxes.  

In 2023, this Additional Medicare Tax applies to those with at least $250,000 of taxable income when filing married and jointly, $125,000 when filing married but separate, or $200,000 for all other taxpayers. Only the amount of income that is above the threshold is taxed at the increased rate. 

What is the Medicare Percentage for the Self-Employed?

The 2.9% total Medicare tax applies for those who are self-employed. The only difference is that because a self-employed individual is both the employee and the employer, they are responsible for the entire 2.9%. 

Additionally, self-employed workers pay a Social Security tax of 12.4%. This, combined with the Medicare tax rate, makes up a 15.3% self-employment tax rate in 2023.

How is Medicare Funded?

The Medicare program is supported by two trust fund accounts that are held by the United States Treasury. 

• The first is the Hospital Insurance Trust Fund. This fund earns money from the Medicare taxes paid by employees and their employers and from earned interest on trust fund investments, income taxes paid on Social Security benefits and Medicare Part A premiums.
  
  The Hospital Insurance Trust Fund pays for Medicare Part A benefits, Medicare administration costs, and fighting Medicare fraud and abuse.
  
  
• The second account that helps fund Medicare is the Supplementary Medical Insurance Trust Fund. This trust is funded by Medicare Part B and Part D premiums along with earned interest on trust fund investments and other funds authorized by Congress.
  
  The Supplementary Medical Insurance Trust Fund helps pay for Medicare Part B and Part D benefits and administration costs. 

Do You Have Additional Medicare Questions? 

You can call an official Medicare representative at 1-800-MEDICARE (1-800-633-4227) with any further questions about Medicare taxes or other costs.

If you’re ready to learn more about how a Medicare Supplement plan may help reduce your Medicare spending, you can request a free plan quote online or call to connect with a licensed insurance agent who can help you compare plans where you live.