Medicare tax

Medicare tax definition - business

Medicare tax

The tax withheld from employee wages to pay for Medicare benefits. The Medicare tax, at 1.45% of wages, is the smaller part of the FICA (Federal Insurance Contributions Act) tax that also includes Social Security. Medicare taxes are not levied against investment income, royalty income, or any other source of income other than wages.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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