2016 Additional Medicare Tax Threshold
For 2016, the Additional Medicare Tax Threshold is 0.9% (Rate), $250,000 (Married filing jointly) and $125,000 (Married filing separately).
Effective 2016-01-01Source: 2016 Instructions for Form 8959 (IRS)Verified 2026-08-29
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)
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