What is the Medicare portion of FICA?

The Medicare portion of the Federal Insurance Contributions Act (FICA) tax rate is set at 1.45%. This tax is applied to all earned income, with no wage base limit, meaning that every dollar of earned income is subject to this portion of the FICA tax. Medicare taxes are used to fund the Medicare program, which provides health insurance for individuals aged 65 and older, as well as certain younger individuals with disabilities.

In addition to the standard 1.45%, there is also an additional 0.9% Medicare surtax that applies to high-income earners, but this is separate from the base Medicare tax rate, which remains at 1.45%. Understanding this distinction is crucial because it clarifies how the funding for Medicare works and the obligations for individuals with different income levels. This is why the 1.45% figure is the correct answer.