What is the base Medicare tax withholding rate?

The base Medicare tax withholding rate is 1.45%. This rate is applied to taxable wages for employees and is used to fund Medicare, the federal program that provides health coverage to individuals aged 65 and older, as well as some younger individuals with disabilities. Employers are also required to match this tax, which means that for every dollar an employee contributes, the employer contributes an equal amount, effectively doubling the funding from each employee's wages.

Understanding this rate is crucial for anyone involved in tax preparation, payroll, or accounting, as it directly affects both the employee's take-home pay and the employer's payroll expenses. While the Medicare tax applies to all earned income, it is important to note that high-income earners may be subject to an additional Medicare tax of 0.9% on wages exceeding a certain threshold, but this is separate from the base withholding rate.

The other rates listed do not correspond to the standard Medicare tax. The correct base rate reflects established federal tax laws and is essential knowledge for accurate financial reporting and compliance.