High income taxpayers should brace themselves for expanded taxes. Starting in 2013, the high income taxpayers will be hit with an increase in Medicare taxes on wages and a new levy on investments.
Single people earning more than $200,000 and married couples earning more than $250,000 will be taxed at an additional .9% rate on earnings over these base amounts. The total Medicare tax paid by the employee would be 2.35%. The employer does not have to match this rate. Self employed persons will pay 3.8% on earnings over these same thresholds.
The Medicare tax is being expanded to include investment income. A new 3.8% tax will be imposed on net investment income of single taxpayers with adjusted gross income over $200,000 and joint filers with adjusted gross income over $250,000. Net investment income is interest, dividends, net rents, passive activity income and certain capital gain property.
These thresholds are not indexed for inflation.
Single people earning more than $200,000 and married couples earning more than $250,000 will be taxed at an additional .9% rate on earnings over these base amounts. The total Medicare tax paid by the employee would be 2.35%. The employer does not have to match this rate. Self employed persons will pay 3.8% on earnings over these same thresholds.
The Medicare tax is being expanded to include investment income. A new 3.8% tax will be imposed on net investment income of single taxpayers with adjusted gross income over $200,000 and joint filers with adjusted gross income over $250,000. Net investment income is interest, dividends, net rents, passive activity income and certain capital gain property.
These thresholds are not indexed for inflation.
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