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Global Work Glossary

Lost in a maze of global employment jargon? Find your way out with our handy collection of work and HR terminology

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# A B C D E F G H I J L M N O P R S T U V W X Y Z

Medicare Tax

What refers to medicare tax?

Medicare Tax or “hospital insurance tax” is a federal tax that employers and employees in the US pay to fund the health insurance program, Medicare. This money is used to support essential healthcare services for eligible individuals, primarily those aged 65 and older and younger people with disabilities.

The Medicare tax rates change every year but usually sit at around 1.4% for employees and employers. People who earn more will pay a higher rate known as the additional Medicare Tax which is around 0.9% of an employee’s salary. Employers are responsible for holding this tax back from an employee’s paycheck. Meanwhile, self-employed workers pay around 2.9% as they cover both the employee and employer parts of the tax.

To stay up to date with the latest tax rates and ensure that all payments are made on time, companies should use an HR platform such as Multiplier. This facilitates automatic tax calculations for different types of workers and easy payments that are compliant with all labor laws.

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