Question

What is Kiyara's additional Medicare tax liability?

A) 0.9% of her income above a certain threshold
B) A flat 3% of her total income
C) 1.45% of her gross income
D) None of the above

Answer 1

Kiyara's additional Medicare tax liability is 0.9% of her income above a certain threshold.

Step-by-step explanation:

The additional Medicare tax liability for Kiyara is 0.9% of her income above a certain threshold.

The key fact here is that the federal income tax is designed so that tax rates increase as income increases, up to a certain level. The payroll taxes that support Social Security and Medicare are designed in a different way. Medicare pays for elderly healthcare and is fixed at 2.9%, with no upper ceiling.