The Medicare tax rate is which of the following?

• A. 0.8%
• B. 6.2%
• C. 1.45%
• D. 5.4%

Answer: (C)

The main idea is understanding how Medicare payroll tax works. The standard Medicare tax rate withheld from employee wages is 1.45%, and the employer also pays 1.45% as a match, totaling 2.9% for the payroll tax on compensation. This rate applies to all earnings because there’s no wage base limit for Medicare like there is for Social Security. There is a separate Additional Medicare Tax of 0.9% that kicks in for higher earners, but that isn’t part of the basic rate for most employees. So the correct rate shown is 1.45%, which reflects the standard Medicare withholding.