A tax under the Federal Insurance Contributions Act (FICA) that is a United States payroll tax imposed by the federal government on both employees and employers to fund Medicare.
The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2016.
An additional Medicare tax was added by the Affordable Care Act (ACA) – Obamacare.
The rate is 0.9 percent for income above a certain threshold. The tax primary affects high income families. The additional 0.9% tax on the wealthiest people goes to help pay part of the cost of the subsidies mandated by the Affordable Care Act.
• How is the ACA funded?
• Taxes at a glance
• Where does the money go?