What is the Medicare tax rate?

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

Answer: (B)

Medicare tax rate refers to the portion of payroll taxes that funds Medicare. The standard employee withholding is 1.45% of gross wages, and the employer also pays 1.45% as a matching amount, making the total Medicare tax 2.9% on wages. Unlike Social Security, there is no wage base limit for Medicare, so this 1.45% applies to all earned income. There is also an Additional Medicare Tax of 0.9% that applies to higher earners above certain thresholds, but the base rate everyone generally sees for the Medicare portion is 1.45%. The other options correspond to different taxes (for example, 6.2% is the Social Security rate), so 1.45% is the correct Medicare rate.