Do you still pay Medicare tax after age 65?
The short answer
Yes. Medicare tax applies to wages and net self-employment earnings no matter how old you are, and being enrolled in Medicare does not create an exemption. There is no age at which the FED MED/EE line stops coming out of a paycheck — it stops when the earned income stops. The IRS treats it as part of the withholding system that applies to employees generally, with no age test.
How the tax is structured
Medicare tax is a flat percentage of covered wages, currently 1.45% for the employee with a matching 1.45% paid by the employer. Two features distinguish it from Social Security tax:
- No wage ceiling. Social Security tax stops for the year once your wages hit an annual wage base. Medicare tax keeps applying to every dollar of covered wages.
- An extra layer on high wages. An Additional Medicare Tax of 0.9% applies to wages above a threshold that depends on filing status, and an employer must begin withholding it once your wages with that employer pass $200,000 for the year. There is no employer match on that extra 0.9%.
If you are self-employed, the same two components show up as self-employment tax instead: you pay both the employee and employer halves of the Medicare portion, with the additional tax layered on above the threshold. Publication 17 is the general reference for how both pieces are reported on an individual return.
Where it shows up on your paperwork
On a pay stub, Medicare tax is usually labeled FED MED/EE (the employee share) and sometimes FED MED/ER (the employer share, which is information only). On the W-2, Medicare wages go in Box 5 and Medicare tax withheld goes in Box 6, per the IRS instructions for Forms W-2 and W-3. Box 5 is often larger than Box 1 because pre-tax items that reduce taxable wages — a traditional 401(k) deferral, for instance — do not reduce Medicare wages. The boxes and their different wage bases are laid out in W-2 Box 2 vs. Box 4 vs. Box 6.
One related point worth knowing: Medicare tax is not federal income tax withholding, so it does not appear in Box 2 and does not count toward the income tax you prepaid for the year. That is why a stub can show Medicare and Social Security coming out while the federal income tax line reads zero — covered in Social Security and Medicare withheld but no federal income tax.
Medicare tax vs. Medicare premiums
These are two different payments and they are easy to mix up.
- Medicare tax is a payroll tax on earnings, collected by the IRS, paid by workers and employers during working years.
- Medicare premiums are what a beneficiary pays for coverage — Part B and Part D premiums, for example — and they are commonly deducted from a monthly Social Security benefit rather than from a paycheck.
So a 68-year-old who is still working can be doing both at once: paying Medicare tax on wages, and having premiums withheld from a benefit payment. Neither one offsets the other.
What income is not subject to Medicare tax
Medicare tax is a tax on earned income. It does not apply to Social Security benefits, pension and annuity payments, IRA or 401(k) distributions, interest, dividends, or capital gains. Those items may well be subject to income tax — whether Social Security benefits are is covered in when Social Security benefits are taxable and in IRS Tax Topic 423 — but they are outside the payroll-tax system. A separate 3.8% Net Investment Income Tax can reach certain investment income at higher income levels; despite the resemblance, it is its own tax with its own rules, not payroll Medicare tax.
If you keep working past 65
The practical consequence is bookkeeping rather than drama. Expect Medicare tax on wages for as long as you earn them, expect Social Security tax too until you hit the annual wage base, and expect your income tax withholding to be the piece that may need attention, since retirement income from several sources can push your total higher than any single payer assumes. The IRS Tax Withholding Estimator is the official tool for checking how the income tax side is tracking; the Medicare line itself is not adjustable.