Definition:
The medicare tax is a payroll tax that must be withheld from an employee's paycheck by an employer. The medicare tax is one part of the employer's obligation to withhold Federal Insurance Contributions Act (FICA) taxes which also includes social security taxes.
Employers pay a matching percentage of FICA taxes; employees pay 1.45% and employers pay an additional 1.45%. Self-employed individuals pay the whole amount of medicare and social security taxes.
Also Known As: FICA taxes
