Employers are required to withhold 1.45 percent of each employee's pay, which is forwarded to the government Medicare fund. The employer must also match this amount, so the total remittance to the government is 2.9 percent. This withholding applies to all employee earnings during the year, with no upper limit.

Example. The Humble Pie Company's most productive salesperson is Elma Soders, whose annual base pay is $25,000. The total of her commissions and performance bonuses for the past year was $147,000, giving her a total compensation of $171,000. What will both Mrs. Soders and the company pay to the government for her Medicare taxes?