Fundamental Payroll Certification (FPC) Practice Exam

Question: 1 / 400

What is the Medicare tax for wages over $200,000 paid by employees?

1.45%

2.35%

The Medicare tax for wages over $200,000 paid by employees is an additional 0.9% on top of the standard rate. The regular Medicare tax rate is 1.45%, which applies to all wages up to the threshold. However, when an employee's earnings exceed $200,000 in a calendar year, an additional tax rate of 0.9% is imposed on the amount over that threshold, bringing the total effective rate to 2.35% for those wages.

This structure is part of the provisions outlined in the Affordable Care Act, aimed at ensuring that high-income earners contribute a fairer share towards Medicare funding. Understanding the progression of these rates and thresholds is crucial for correctly calculating employee withholdings and ensuring compliance with federal tax regulations.

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3.0%

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