Employers, payroll vendors and executives should be planning for the additional Medicare tax that will apply to high wage earners beginning in 2013. The 2010 Health Care Reform Act imposes an additional Medicare tax of 0.9% on employee’s wages in excess of the applicable dollar amount for the employee’s filing status (as shown below):
- Married, filing jointly — $250,000
- Married, filing separately — $125,000
- Single — $200,000
- Head of household (with qualifying person) — $200,000
- Qualifying widow(er) with dependent child — $200,000
Thus, for employees above the threshold, the Medicare tax rate will increase from 1.45% to 2.35% (on the employee portion) for wages in excess of the threshold. The employer portion of the tax will remain unchanged at 1.45%.