What is the rate for Additional Medicare wages and the threshold amount that applies?

The Additional Medicare Tax is imposed at a rate of 0.9% for individuals whose earnings exceed the threshold of $200,000. This tax applies solely to the income above this threshold, meaning that once an individual's earnings surpass $200,000, they will owe an additional tax rate of 0.9% on the income exceeding that amount.

This provision was introduced to help fund Medicare and is particularly notable because it affects higher earners, ensuring that those who may have a greater capacity to contribute further to the Medicare system do so. Unlike regular Medicare taxes, which have no upper limit on taxable wages, the Additional Medicare Tax specifically targets those with higher incomes.

Understanding the threshold and the corresponding rate is crucial for payroll processing and compliance, as employers are responsible for withholding this additional tax from employees' wages once they hit the $200,000 limit. This knowledge helps ensure accurate payroll calculations and adherence to tax regulations.