High-income households will pay more Medicare under the new health reform package President Obama signed into law Tuesday.
Currently, the Medicare payroll tax is 2.9% on all wages, with the worker 1.45% and the employer 1.45%. The Medicare payroll tax is going up for individuals making over $200,000 in wages and couples making over $250,000. Beginning in 2013, high-income individuals will pay an additional 0.9 percentage points, making their total share 2.35% of their wages.
A reconciliation bill, yet to be approved by Senate, could make high-income households subject to a new 3.8% Medicare tax on investment income beginning in 2013. The bill would hit households whose gross income exceeds $200,00 for individuals or coup$250,000 for couples.
The 3.8% tax would apply to whichever amount is less — your investment income or the amount that your modified adjusted gross income (AGI) exceeds the high-income threshold.
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