Answer
Do consultants making over $200K pay extra Medicare tax?
Short answer
Yes. Consultants with net self-employment income above $200,000 (single) or $250,000 (married filing jointly) owe an extra 0.9% Medicare surtax on the amount above that threshold. Unlike the base Medicare rate, there is no employer to split this cost, and the deduction for half of SE tax does not reduce the surtax base. At $350K net profit, the surtax adds roughly $1,350 on top of the standard SE tax bill.
Medicare tax at four income levels (single filer, 2026)
Net profit
Base Medicare (2.9%)
Surtax (0.9%)
Total Medicare
$200,000
$5,356
$0
$5,356
$250,000
$50,000 above threshold
$6,695
$450
$7,145
$300,000
$100,000 above threshold
$8,034
$900
$8,934
$350,000
$150,000 above threshold
$9,374
$1,350
$10,724
Base Medicare calculated on net earnings from self-employment (net profit times 0.9235) at 2.9%. Surtax is 0.9% on net profit above the $200,000 single-filer threshold with no employer split and no deduction offset.
The standard Medicare portion of self-employment tax is 2.9%, split notionally as 1.45% employee and 1.45% employer. The Additional Medicare Tax is an extra 0.9% with no split at all. Self-employed people absorb the entire surtax. It applies to net self-employment income above $200,000 for single filers, $250,000 for married filing jointly, and $125,000 for married filing separately. These thresholds are not indexed for inflation, so more consultants cross them each year.
The calculation uses your actual net profit, not the 92.35%-adjusted figure used for the base SE tax. If your Schedule C net profit is $350,000 and you are a single filer, the surtax base is $150,000 (the amount above the $200,000 threshold). Surtax owed: $1,350. Add the base Medicare of roughly $9,943 on the full $350,000 net profit, and your total Medicare cost is approximately $11,293 before any S-corp planning.
Quarterly estimated tax payments should include the surtax. The IRS expects you to pay as you earn. If your income will clear $200,000 during the year, the 0.9% surtax accrues on every dollar above the line. Underpaying quarterly estimates that ignore the surtax is one of the more common surprises at April filing time. The safe-harbor rule applies here too: 100% of the prior year's tax liability (or 110% if your prior-year AGI exceeded $150,000) keeps you safe from underpayment penalties.
Married filers face a specific trap when both spouses earn income. The $250,000 threshold is per household, not per earner. If each spouse earns $150,000 in W-2 or 1099 income, neither individually crosses the $200,000 single threshold, so no withholding occurs during the year. But household income is $300,000, which clears the $250,000 MFJ threshold by $50,000. The couple owes $450 in Additional Medicare Tax at filing. The IRS will not send a notice in advance. You find out in April.
The S-corp election can eliminate the surtax entirely for many consultants. The surtax applies to W-2 wages above the threshold, not to S-corp distributions. A consultant earning $350,000 net profit who structures an S-corp with a $140,000 reasonable salary keeps W-2 wages below the $200,000 trigger. The $210,000 in distributions passes through with no SE tax and no Additional Medicare Tax. Total Medicare cost drops from roughly $11,293 to the FICA Medicare on the $140,000 salary, approximately $4,060. That is a permanent annual reduction, not a one-time adjustment.
The S-corp move at $350K
Keeping your salary below $200K eliminates the surtax entirely.
At $350K net profit, a sole proprietor pays Additional Medicare on $150K of income above the threshold. An S-corp with a $140K reasonable salary keeps W-2 wages under the $200K line. The surtax disappears, and total Medicare costs drop substantially even after payroll overhead.
Sole Prop
Schedule C, $350K
S-Corp
$140K salary
Social Security tax
$21,836
$17,360
on $140K salary (EE + ER)
Base Medicare (2.9%)
$9,374
$4,060
on $140K salary (EE + ER)
Additional Medicare surtax (0.9%)
$1,350
$0
salary below $200K threshold
Payroll overhead
—
$1,800
service + state fees + CPA delta
Total SE / FICA cost
$32,560
$23,220
Annual savings with S-corp
SE and Medicare costs, net of payroll overhead
~$9,340/yr
2026 figures. S-corp uses $140K reasonable salary; distributions of $210,000 bear no SE tax or Additional Medicare. SS wage base $176,100. Payroll overhead estimated at $1,800/yr. Actual savings depend on salary methodology and state requirements.
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