Additional Medicare tax
By Jude Wallis
The additional Medicare tax is a 0.9 percent charge on wages and self-employment earnings above a threshold set by filing status. Only earnings above the threshold are taxed.
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It is a surtax on earned income and it stacks on top of ordinary Medicare tax rather than replacing it. The employer pays no matching share of the 0.9 percent, which makes it the one payroll tax where the split is entirely one-sided.
The threshold applies to combined earnings on the return, but withholding is done by each employer on the wages that employer pays. Two jobs, each under the threshold, can add up to earnings over it, so the balance turns up when the return is filed rather than in a paycheque.
It is not the net investment income tax, which is 3.8 percent on investment income and has its own base. The additional Medicare tax calculator applies the rate to the excess, and how FICA works is the payroll picture it sits on.