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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.
You will also need to consider the additional Medicare tax deduction on higher-income employees, which begins when the employee reaches a specific pay amount for the year. The additional tax is 0.9% of the gross pay, and it starts at different levels, based on the employee's W-4 status.