What's the Difference Between Medicare Tax and Social Security Tax?

Medicare tax and Social Security tax are both payroll taxes withheld from your paycheck, but they fund different programs and have different rates and caps. Social Security tax is 6.2% for employees (matched by the employer) and only applies to the first $168,600 of wages in 2024 — once you hit that cap, no further Social Security tax is withheld for the rest of the year. Medicare tax is 1.45% for employees (also matched by the employer) and has no wage cap — it applies to every dollar you earn. High earners also pay an Additional Medicare Tax of 0.9% on wages above $200,000 for single filers and $250,000 for married couples, which is not matched by the employer. Together, these taxes fund the Social Security retirement and disability programs and Medicare health coverage for seniors.