What the tax is
On top of regular Medicare, IRS Publication 15 (2026) requires the employer to withhold an Additional Medicare Tax of 0.9% from wages it pays an employee in excess of $200,000 in a calendar year. Withholding starts in the pay period in which wages pass $200,000 and runs through year end. It is reported on Form 941 line 5d at 0.009, separate from the 2.9% Medicare rate.
No employer match
This is the one payroll tax the employer does not match. Publication 15 states there is no employer share: the employee alone owes it. Three traps:
- Splitting the 0.9% between employer and employee, or doubling it as an employer match, is wrong.
- The threshold is $200,000, not the $184,500 social security wage base.
- It is 0.9%, not an extra 1.45%. The 1.45% is the regular Medicare rate.
Only the excess is taxed
Worked example: a project executive paid $260,000 by one contractor.
- Excess over the threshold: 260,000 − 200,000 = 60,000
- Additional Medicare Tax withheld: 60,000 × 0.009 = $540
Applying 0.9% to all $260,000 gives $2,340, which is wrong. Doubling to $1,080 invents an employer match. Using 1.45% on the $60,000 gives $870, which mixes in the regular Medicare rate.
The employer's own Medicare on a high earner
The employer still pays its regular 1.45% Medicare on every dollar, because Medicare has no wage cap, and it adds nothing for the Additional Medicare Tax. For the same $260,000 employee:
- Employer Medicare: 260,000 × 0.0145 = $3,770
The traps: $4,310 adds the employee's $540 as if the employer matched it; $7,540 uses the combined 2.9% rate, which includes the employee's 1.45%; $2,900 stops at $200,000 (200,000 × 0.0145), treating the Additional Medicare threshold as a cap on Medicare. The $200,000 threshold only switches on the employee's extra 0.9%. It never caps regular Medicare for either side.