2016 Additional Medicare Tax Threshold
For 2016, the Additional Medicare Tax Threshold figures are 0.9% (Rate), $250,000 (Married filing jointly), $125,000 (Married filing separately) and $200,000 (All other taxpayers).
Effective 2016-01-01Source: 2016 Instructions for Form 8959 (IRS)Verified 2026-09-03
Who it applies to
Taxpayers with Medicare wages, railroad retirement (RRTA) compensation, or self-employment income above the applicable threshold for their filing status in 2016.
What changed this year, and why
For 2016, a 0.9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that exceed a threshold amount based on filing status. The threshold is $250,000 for married taxpayers filing jointly and $125,000 for married taxpayers filing separately. For other filing statuses the threshold is lower than the joint amount. Medicare wages and self-employment income are combined to determine whether income exceeds the threshold. Railroad retirement compensation is compared to the threshold separately. The threshold amounts are not indexed for inflation.
Common questions
- What does the Additional Medicare Tax apply to?
- The 0.9% tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income above a threshold amount.
Your employer withholds at $200,000 whatever your filing status
Employers must begin withholding the Additional Medicare Tax once an employee's wages or railroad retirement compensation exceed $200,000 in a calendar year, regardless of the employee's filing status and regardless of wages or compensation paid by another employer. This means the employer uses a single $200,000 threshold even though the actual tax thresholds vary by filing status. Once withholding starts, the employer must continue it in every pay period for the rest of that calendar year. The tax withheld is at the rate of 0.9%. If too much is withheld because the employee's actual threshold is higher than $200,000, the excess can be claimed as a credit on the tax return by filing Form 8959.
A railroad employer must withhold Additional Medicare Tax on compensation it pays to you in excess of $200,000 for the calendar year, regardless of your filing status and regardless of wages or compensation paid by another employer.
2016 Instructions for Form 8959, Additional Medicare Tax (IRS)
These thresholds do not move with inflation
The Additional Medicare Tax thresholds are fixed statutory amounts that do not increase with inflation. The threshold amounts shown in the IRS chart - including $250,000 for married filing jointly and $125,000 for married filing separately - remain at those levels year after year unless Congress changes the law. Because wages typically rise with inflation while these thresholds stay constant, more taxpayers may become subject to the Additional Medicare Tax over time, a phenomenon sometimes called bracket creep. Unlike some other tax provisions that are adjusted annually for cost-of-living increases, the Additional Medicare Tax thresholds are not indexed and therefore do not automatically move upward as prices rise.
Note. The threshold amounts below aren't indexed for inflation.
2016 Instructions for Form 8959, Additional Medicare Tax (IRS)
When Form 8959 is required
You must file Form 8959 if any of several conditions apply. You must file if your Medicare wages and tips shown in box 5 of any single Form W-2 are greater than $200,000, or if your railroad retirement compensation shown in box 14 of any single Form W-2 is greater than $200,000. You also must file if your total Medicare wages and tips plus your self-employment income exceed the threshold amount for your filing status shown in the chart. Similarly, if your total railroad retirement compensation and tips exceed the threshold for your filing status, you must file Form 8959. These filing requirements apply even if you ultimately owe no Additional Medicare Tax after combining all your wages and self-employment income and applying the appropriate threshold for your filing status.
You must file Form 8959 if one or more of the following applies to you. Your Medicare wages and tips on any single Form W-2 (box 5) are greater than $200,000. Your railroad retirement (RRTA) compensation on any single Form W-2 (box 14) is greater than $200,000.
2016 Instructions for Form 8959, Additional Medicare Tax (IRS)
Wages and self-employment income are added together
When determining whether you owe Additional Medicare Tax, your Medicare wages and your self-employment income are added together and compared to the threshold for your filing status. This means that if you have both wages from employment and income from self-employment, both sources are combined to determine if your total income exceeds the applicable threshold. A self-employment loss is not used to reduce your wages for purposes of this calculation. Railroad retirement compensation is handled differently and is compared to the threshold separately rather than being combined with wages and self-employment income. This combination rule means that taxpayers with both wages and self-employment income may owe the 0.9% tax even if each source of income alone would fall below the threshold amount for their filing status.
Medicare wages and self-employment income are combined to determine if your income exceeds the threshold.
2016 Instructions for Form 8959, Additional Medicare Tax (IRS)
Railroad compensation is measured on its own
Railroad retirement compensation under the Railroad Retirement Tax Act is treated separately from Medicare wages and self-employment income for purposes of the Additional Medicare Tax. Rather than being combined with your wages and self-employment income, railroad retirement compensation is separately compared to the threshold amount for your filing status. This means you measure your railroad compensation independently when determining whether it exceeds the threshold. Your employer must withhold the Additional Medicare Tax on railroad compensation it pays you that exceeds the threshold, and this withholding is calculated without regard to any wages or other compensation you may receive from other employers. If you have both railroad compensation and wages from regular employment, each type of income is measured on its own against the threshold to determine your total Additional Medicare Tax liability.
Railroad retirement (RRTA) compensation should be separately compared to the threshold.
2016 Instructions for Form 8959, Additional Medicare Tax (IRS)
Nonresident aliens and Americans abroad get no special exemption
The Additional Medicare Tax applies the same way to nonresident aliens and U.S. citizens living abroad as it does to anyone else in the United States. There is no separate exemption, reduced rate, or higher threshold for taxpayers who live outside the country or who are not U.S. residents for tax purposes. Any wages, railroad retirement (RRTA) compensation, or self-employment income that is subject to regular Medicare tax will also be subject to the 0.9% Additional Medicare Tax if it exceeds the applicable threshold for the taxpayer's filing status. For someone filing as married filing jointly, the threshold is $250,000; for married filing separately, it is $125,000. Living overseas does not change these figures or the obligation to pay the tax.
There are no special rules for Additional Medicare Tax for nonresident aliens and U.S. citizens living abroad.
2016 Instructions for Form 8959, Additional Medicare Tax (IRS)
Withholding starts the pay period your wages cross $200,000, not spread over the year
Your employer must start withholding the 0.9% Additional Medicare Tax in the pay period in which your Medicare wages or railroad retirement (RRTA) compensation for the year exceed $200,000, regardless of your filing status. The withholding is not spread evenly across the year based on an estimate; it begins the pay period you cross the $200,000 mark and continues in every subsequent pay period for the rest of that calendar year. If you work more than one job, each employer withholds once that employer's payments to you exceed $200,000. The withholding may not match what you actually owe - which depends on your filing status and total income - but the employer's obligation is mechanical: once your wages from that employer pass $200,000, withholding starts and does not stop until the year ends.
Your employer is required to begin withholding Additional Medicare Tax in the pay period in which your wages or compensation for the year exceed $200,000 and continue to withhold it in each pay period for the remainder of the calendar year.
2016 Instructions for Form 8959, Additional Medicare Tax (IRS)
Withheld Additional Medicare Tax comes back as a credit if you do not actually owe it
If you don't owe the 0.9% Additional Medicare Tax after filing your return - for example, because your total income falls below the threshold for your filing status, or because too much was withheld across multiple jobs - you can recover the full amount that was withheld. You claim a credit for any withheld Additional Medicare Tax against the total tax liability shown on your return by filing Form 8959. The credit reduces your overall tax bill dollar for dollar, and any excess is refunded to you. This means the employer withholding is essentially a prepayment; if your actual liability is zero, you get the withheld amount back in full rather than losing it.
If you don't owe Additional Medicare Tax, you can claim a credit for any withheld Additional Medicare Tax against the total tax liability shown on your tax return by filing Form 8959.
2016 Instructions for Form 8959, Additional Medicare Tax (IRS)
Your wages eat into the threshold for your self-employment income, but RRTA pay does not
If you have both wages and self-employment income in the same year, the threshold used to determine whether your self-employment income is subject to the 0.9% Additional Medicare Tax is reduced by the amount of your Medicare wages that are already subject to the tax. In other words, your wages eat into the threshold before your self-employment income is tested against what remains - though the threshold cannot go below zero. There is no equivalent rule for railroad retirement (RRTA) compensation: RRTA pay does not reduce the threshold for self-employment income. This means a taxpayer with wages and self-employment income must combine the two to determine how much of the self-employment income is subject to the tax, while a taxpayer with RRTA compensation and self-employment income tests each against the threshold separately.
If you have both wages and self-employment income, the threshold amount for applying Additional Medicare Tax on the self-employment income is reduced (but not below zero) by the amount of wages subject to Additional Medicare Tax. There is no equivalent rule for railroad retirement (RRTA) compensation.
2016 Instructions for Form 8959, Additional Medicare Tax (IRS)
Waiting to pay it with your return can trigger a penalty
If you owe Additional Medicare Tax for the year, waiting to pay it when you file your return rather than making estimated tax payments during the year can trigger a penalty. The penalty is imposed for failure to make estimated tax payments, and it applies specifically when a taxpayer defers the entire Additional Medicare Tax liability to the annual return. To avoid this penalty, you should account for the Additional Medicare Tax when calculating your quarterly estimated tax payments. The IRS directs taxpayers to Form 2210 (or Form 2210-F for farmers and fishermen) and its instructions to determine whether the estimated tax penalty applies to their situation.
Estimated tax penalty. You may be subject to a penalty for failure to make estimated tax payments if you owe Additional Medicare Tax and wait to pay the tax with your tax return.
2016 Instructions for Form 8959, Additional Medicare Tax (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
2016 Instructions for Form 8959 (IRS)
- Rate
Additional Medicare Tax. A 0.9% Additional Medicare Tax applies to your Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income above a threshold amount.
- Married filing jointly
Married filing jointly $250,000
- Married filing separately
Married filing separately $125,000
- All other taxpayers
Single $200,000 Head of household $200,000 Qualifying widow(er) with dependent child $200,000