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For example, younger persons who are still working probably arenât on Medicare and are still paying into the system by a rate of 6.2% of their annual earnings. Elderly persons on Medicare can use the IRS tax deduction to reduce their tax burden by claiming costs associated with Medicare payments.
Maximum Deduction. The FICA tax deduction is a maximum of 7.65 percent of your earnings. This payroll deduction is divided by the following: 6.2 percent goes toward Social Security, while 1.45 percent goes to Medicare premiums. This money goes into the federal pool for Social Security and Medicare.