What percentage of gross pay is deducted for Medicare tax for employees?

• A. 1.0%
• B. 1.45%
• C. 2.0%
• D. 3.0%

Answer: (B)

The percentage deducted from gross pay for Medicare tax for employees is 1.45%. This is a standard rate established by federal law and applies to all wages earned by employees. Every employer is required to withhold this percentage from employee earnings to fund the Medicare program, which provides health insurance for individuals over 65 and for certain younger individuals with disabilities.

The rate of 1.45% specifically applies to all gross wages without any wage limit, which means there is no cap on the amount of income subject to this tax. Employees are not only responsible for this deduction; employers also contribute an additional 1.45% of the employee's gross pay toward Medicare tax.

Understanding this rate is crucial for both employees and employers as it impacts payroll calculations and overall taxation.