Medicare is a type of payroll tax that employers need to calculate when processing payroll Medicare has both an employee and employer portion. In other words, employers will need to deduct Medicare taxes from employee wages when calculating net wages. The rate is currently 1.45% of gross wages. Unlike social security Medicare does not have an upper cap where taxes stop being calculated on wages. The employer will also have to pay 1.45% out of business profits as well. For more accounting information see accounting website. http://accountinginstruction.info/