Demystifying the Medicare Tax Rate: A Comprehensive Guide for Financial Planning


Demystifying the Medicare Tax Rate: A Comprehensive Guide for Financial Planning

The term “medicare tax rate” refers to the percentage of an individual’s income that is deducted to fund Medicare, the U.S. government’s healthcare program for people age 65 and older, as well as for certain younger people with disabilities. For example, in 2023, the Medicare tax rate is 1.45% for both employees and employers.

This tax is essential for ensuring the financial stability of Medicare, which provides essential healthcare services to millions of Americans. Its benefits include hospital and medical coverage, prescription drug coverage, and preventive care services. A key historical development was the expansion of Medicare in 1965, which extended coverage to those under 65 with disabilities.

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