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Additional 0.9 Percent Medicare Tax

The Patient Protection and Affordable Care Act (PPACA) imposes an Additional 0.9 Percent Medicare Tax on earned income above specified dollar amounts. The 0.9 percent tax is imposed on individuals and does not apply to corporations, estates, or trusts. The tax on earned income is in addition to the existing 1.45 percent Hospital Insurance (HI) tax on earned income; thus a combined tax of 2.35 percent may apply to the employee’s earned income. Existing employer contributions of 1.45 percent also apply to earned income, for an overall combined rate of 3.8 percent. The Additional Medicare Tax applies to an individual’s total wages, other compensation, and self-employment income for the tax year