written by Kevin Hogan

Kevin Hogan BW 9-06

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.