written by Kevin Hogan
The American Taxpayer Relief Act of 2012, along with the Health Care legislation tax changes effective for 2013, have significantly raised tax rates and reduced deductions. Below is a quick summary of the new income thresholds individuals need to plan for this year.
1. Income of more than $200,000/$250,000 (married filing jointly)
- Additional Medicare payroll tax of 0.9% will apply to wages and self-employment income.
- Additional Medicare surtax of 3.8% will apply to the lesser of unearned income (i.e. interest, dividends, capital gains, rental income, and passive income); or adjusted gross income in excess of the above income amounts.
2. Income of more than $250,000/$300,000 (married filing jointly)
- (1) changes above plus;
- Personal exemptions are reduced.
- Itemized deductions are reduced.
3. Income of more than $400,000/$450,000 (married filing jointly)
- (1) and (2) changes above plus;
- Marginal tax rate of 39.6% applies to ordinary income.
- Qualified dividends rate increases from 15% to 20%.
- Capital gains rate increases from 15% to 20%.
We will continue to report on any future tax updates or changes. If you have questions, please calls us at 417-881-0145.