Calculating Medicare Tax

This diagram illustrates the flow of Medicare tax calculation:

This diagram illustrates the flow of Medicare tax calculation.

The system calculates Medicare employee tax as a deduction (MEDICARE EE) using the formula TAX FM MED EE. The system includes this deduction in net pay calculation. The calculations are based on a variable that stores the tax rate for Medicare.

The system calculates Medicare employer tax as a deduction (MEDICARE ER) using the formula TAX FM MED ER. Because this deduction applies only to employers, the system does not include it in net pay calculation.