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Simple English definitions for legal terms
Medicare Tax
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A quick definition of Medicare Tax:
Medicare Tax: The Medicare tax is a tax that helps pay for healthcare for older people and people with disabilities in the United States. It is taken out of your paycheck if you work and is used to fund the government's Medicare program. The amount taken out is usually 1.45% of your pay, but if you make more than a certain amount, you may have to pay more. Your employer also pays the same amount as you do. This tax is important because it helps people who need medical care get the help they need.
A more thorough explanation:
The Medicare tax is a type of payroll tax in the United States that helps fund the government's Medicare program. It is one of two categories under the Federal Insurance Contributions Act (FICA), the other being social security tax.
For employees, the contribution rate for Medicare is 1.45%, which is matched by 1.45% for employers, making a total of 2.9%. This means that if you earn $50,000 per year, you and your employer will each contribute $725 to Medicare.
However, if you earn more than $200,000 within the calendar year, you must also withhold an additional 0.9% of your pay. For example, if you earn $250,000 per year, you will contribute 1.35% to Medicare on the first $200,000 of your income, and 2.25% on the remaining $50,000.
The Medicare tax is important because it helps fund healthcare for people who are 65 years or older, as well as those with certain disabilities. Without this tax, the government would not have enough money to provide these services to those who need them.
For more information on the Medicare tax, you can visit the .