5 — Medicare Wages and Tips Updated for tax year 2025

What this line means

The total wages and tips subject to Medicare tax. Box 5 is usually the same as or higher than Box 3 because there is no wage cap for Medicare tax — every dollar you earn is subject to it. Like Box 3, most pre-tax payroll deductions (401(k), health insurance) do not reduce Box 5, so it is typically higher than Box 1.

Does this apply to you?

• You earned wages from a W-2 employer during the year
• You want to understand why Box 5 differs from Box 1 and Box 3
• You earned over $200,000 and need to understand the Additional Medicare Tax
• You are comparing W-2 boxes to verify your employer calculated payroll correctly

Easy to overlook

Box 5 has no cap, unlike Box 3 Social Security wages (Box 3) stop at $176,100. Medicare wages (Box 5) have no limit. If you earned $300,000, Box 3 shows $176,100 but Box 5 shows $300,000. This distinction matters for high earners verifying their W-2 — Box 5 should equal your total compensation before income-tax-only pre-tax deductions. ¹ [SOURCE: IRS Publication 15 (Circular E) — Medicare wage calculation]

The Additional Medicare Tax hits earnings over $200,000 Starting at $200,000 in wages ($250,000 for married filing jointly, $125,000 for married filing separately), an extra 0.9% Medicare tax applies. Your employer withholds this additional tax from your paycheck once your wages pass $200,000, but the employer does not match it. If you are married and your combined wages exceed $250,000, you may owe additional tax when you file even though each employer withheld correctly based on individual earnings. ² [SOURCE: ACA — Additional Medicare Tax threshold $200,000 single / $250,000 MFJ]

Watch out for this

Assuming all three wage boxes (1, 3, and 5) should match. They measure different things: Box 1 is taxable income (reduced by 401(k) and health premiums), Box 3 is Social Security wages (capped), and Box 5 is Medicare wages (uncapped). On most W-2s, Box 5 is the highest number, Box 3 is close behind, and Box 1 is the lowest.

Related lines on your return

• Box 6 — Form W-2 — The Medicare tax actually withheld (1.45% of Box 5, plus 0.9% on amounts over $200,000)
• Box 3 — Form W-2 — Social Security wages; similar to Box 5 but capped at the wage base
• Box 1 — Form W-2 — Taxable wages; reduced by pre-tax deductions that do not reduce Box 5