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For example, younger persons who are still working probably arenât on Medicare and are still paying into the system by a rate of 6.2% of their annual earnings. Elderly persons on Medicare can use the IRS tax deduction to reduce their tax burden by claiming costs associated with Medicare payments.
Medicare tax is a federal payroll tax that employers and employees in the United States pay. Your employer is supposed to withhold Medicare tax at the rate the federal government sets. As of 2011, you pay 1.45 percent of all your taxable wages for Medicare tax.