The Medicare surtax is an additional tax that applies to certain types of income and is used to fund Medicare expansion and other parts of the Affordable Care Act (ACA) . The surtax is also known as the Additional Medicare Tax and is an extra 0.9% on earned income beyond a specific threshold amount. The tax applies to wages, self-employment income, and railroad retirement (RRTA) compensation that exceed certain thresholds. The income thresholds for the surtax are based on modified adjusted gross income (MAGI) and vary depending on filing status. The surtax applies to taxpayers above a certain MAGI threshold who have unearned income including investment income, such as taxable interest, realized capital gains, and nonqualified annuities. The tax rate for the Medicare surtax on investment income is 3.8% . The standard Medicare tax is a percentage of gross wages that all employees, employers, and self-employed workers must pay to fund Medicare. The standard Medicare tax covers Medicare Part A, which provides medical insurance for senior citizens and people who live with disabilities. The Additional Medicare Tax goes toward the ACA, not Medicare Part A.