How Much Is the Medicare Tax Rate in 2023?

• by Christian Worstell
• August 29, 2023
• Reviewed by John Krahnert

The 2023 Medicare tax rate is 2.9% total. You’re responsible for paying half of this total Medicare tax amount (1.45%) and your employer is responsible for the other 1.45%. Your Medicare tax is deducted automatically from your paychecks.

Where do Medicare taxes go, and how is Medicare paid for?

The Medicare tax that is withheld from your paychecks helps fund health care costs for people enrolled in Medicare.

Medicare is financed through two trust fund accounts held by the United States Treasury:

• Hospital Insurance Trust Fund
• Supplementary Insurance Trust Fund

The funds in these trusts can only be used for Medicare.

Hospital Insurance Trust Fund

The Hospital Insurance Trust is largely funded by Medicare taxes paid by employees and employers, but is also funded by:

• Interest earned on trust fund investments
• Income taxes paid on Social Security benefits
• Medicare Part A premiums from people who are not eligible for premium-free Part A

The Hospital Insurance Trust Fund pays for Medicare Part A benefits and Medicare Program administration costs. It also pays for Medicare administration costs and fighting Medicare fraud and abuse.

Supplementary Medical Insurance Trust Fund

This trust is largely funded by the premiums paid by people enrolled in Medicare Part B (medical insurance) and Medicare Part D (Medicare prescription drug plans), but it is also funded by:

• Interest earned on the trust fund investments
• Funds authorized by Congress

The Supplementary Medical Insurance Trust Fund pays for:

• Medicare Part B benefits
• Medicare Part D prescription drug coverage
• Medicare Program administration costs

Medicare surtaxes and the ACA

The Affordable Care Act (ACA) was passed in 2010 to help make health insurance available to more Americans.

To aid in this effort, the ACA added an additional Medicare tax for high income earners. The percentage of Medicare tax was raised from 1.45 percent to 2.34 percent for people with an earned annual income of more than $200,000 ($250,000 for married couples filing jointly).¹

Additional employee tax rate

The additional Medicare Tax 2023 rate is 0.9%. The additional Medicare tax is for high earners and is the sole financial responsibility of the employee and is not split between the employee and employer. Your employer is required to withhold Additional Medicare Tax amounts for you when you enter this category.

If you make more than $200,000 per year in 2023 as an individual filer, the 0.9 percent surtax only applies to the amount you make that is over $200,000. For instance, if you make $300,000 per year, you and your employer each pay the standard 1.45 percent Medicare tax for the first $200,000 you make, and you pay the additional 0.9 percent Medicare tax on the $100,000 that is left.

Medicare tax brackets for the self-employed

Even if you are self-employed, the current Medicare tax rate is 2.9%.

Typically, people who are self-employed pay a self-employment tax of 15.3% total.²

The self-employed tax consists of two parts:

• 12.4% for Social Security
• 2.9% for Medicare 

You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income. If you’re unsure of how to do this, a tax professional may be able to help.

Get the answers to your Medicare questions

If you’d like more information about Medicare, including your Medicare enrollment options, a licensed insurance agent can help. 

Call to speak to a licensed insurance agent today.

About the author

Christian Worstell is a senior Medicare and health insurance writer with MedicareAdvantage.com. He is also a licensed health insurance agent. Christian is well-known in the insurance industry for the thousands of educational articles he’s written, helping Americans better understand their health insurance and Medicare coverage.

Christian’s work as a Medicare expert has appeared in several top-tier and trade news outlets including Forbes, MarketWatch, WebMD and Yahoo! Finance.

Christian has written hundreds of articles for MedicareAvantage.com that teach Medicare beneficiaries the best practices for navigating Medicare. His articles are read by thousands of older Americans each month. By better understanding their health care coverage, readers may hopefully learn how to limit their out-of-pocket Medicare spending and access quality medical care.

Christian’s passion for his role stems from his desire to make a difference in the senior community. He strongly believes that the more beneficiaries know about their Medicare coverage, the better their overall health and wellness is as a result.

A current resident of Raleigh, Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism.

If you’re a member of the media looking to connect with Christian, please don’t hesitate to email our public relations team at Mike@tzhealthmedia.com.

 

 

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