Medicare Tax
Medicare tax is a payroll tax imposed by the federal government on both employers and employees to fund the Medicare program. The Medicare tax is imposed on wages, compensation, and self-employment income. It is also imposed on certain other types of income, such as distributions from certain retirement plans. The Medicare tax rate is currently 2.9%, with 1.45% paid by the employer and 1.45% paid by the employee. The Medicare tax rate is the same for all taxpayers, regardless of income level.
History of the Medicare Tax
The Medicare tax was first enacted in 1965 as part of the Social Security Amendments of 1965. The tax was originally set at 0.7% of wages and compensation, with half paid by the employer and half paid by the employee. The tax rate was increased several times over the years, and in 1993 it was increased to its current rate of 2.9%.
Comparison of Medicare Tax Rates
Year | Employer Rate | Employee Rate |
---|---|---|
1965 | 0.7% | 0.7% |
1993 | 1.45% | 1.45% |
Current | 1.45% | 1.45% |
Summary
The Medicare tax is a payroll tax imposed by the federal government on both employers and employees to fund the Medicare program. The Medicare tax rate is currently 2.9%, with 1.45% paid by the employer and 1.45% paid by the employee. The Medicare tax was first enacted in 1965 as part of the Social Security Amendments of 1965. For more information about the Medicare tax, visit the Internal Revenue Service website or the Social Security Administration website.
See Also
- Social Security Tax
- Income Tax
- Self-Employment Tax
- Employment Tax
- Payroll Tax
- Unemployment Tax
- Medicaid Tax
- FICA Tax
- Federal Insurance Contributions Act (FICA)
- Federal Unemployment Tax Act (FUTA)