Medicare tax definition

One component of the FICA tax (the other component is Social Security). This payroll tax is withheld from employees' payroll checks and is also matched by the employer. The employee and the employer each pay the Medicare tax of 1.45% of all wages and salaries. As a result, the employer must remit to the federal government 2.9% of its employees' wages and salaries.

Beginning in 2013, there is a Medicare surtax of 0.9% that is applied to an employee's wages and salaries in excess of specified amounts. It also applies to a self-employed person's net income. See for details.