What is the Obama care surtax?

What is the Obama care surtax?

To help fund the Affordable Care Act (also dubbed Obamacare), there was a 3.8% surtax levied against higher incomes. This specific tax took effect in 2013 and, according to the Tax Policy Center, is expected to bring in nearly 30 billion dollars of tax revenue. This surtax begins for those making just $200,000.

What is Medicare surtax?

The net investment income tax, also known as the “unearned income Medicare contribution surtax,” is an additional 3.8% tax applied to net investment income as of 2021. Like the additional Medicare tax, there is no employer-paid portion.

What is the meaning of surtax?

A surtax is a tax levied on top of another tax. The tax can be calculated as a percentage of a certain given amount or it can be a flat dollar charge. A surtax is also known as a tax surcharge.

What is a Medicare surtax 2021?

In 2021, the Medicare tax rate is 2.9%, which is split between an employee and their employer. Self-employed individuals are responsible for both portions of Medicare tax but only on 92.35% of business earnings. There are two additional Medicare surtaxes that apply to certain high earners.

What does the 3.8 surtax apply to?

A flat surtax of 3.8% applies to net investment income of most married couples who have more than $250,000 of adjusted gross income (AGI). For most single filers, the threshold is $200,000. The 3.8% levy applies only to the investment income above the threshold for single/married filers.

What is the 3.8 surtax?

A flat surtax of 3.8% applies to net investment income of most married couples who have more than $250,000 of adjusted gross income (AGI). For most single filers, the threshold is $200,000. The 3.8% levy applies only to the investment income above the threshold for single/married filers. Total extra tax: $3,040.

How does the Obamacare Medicare surtax work?

How the Obamacare Medicare Tax works. There is a flat surtax of 3.8% on net investment income for married couples who earn more than $250,000 of adjusted gross income (AGI). For single filers, the threshold is just $200,000.

Is the 0.9% Obamacare tax a surtax?

The 0.9% Obamacare Tax That’s About To Hit You. It’s the 0.9% Medicare surtax on wages and self-employment income (not to be confused with the separate new 3.8% net investment tax on capital gains, dividends and passive income).

How much is the Medicare surtax on self employment?

(The Medicare base tax is 2.9% for the self-employed, so the surtax increases the total Medicare tax to 3.8% on self-employment income.) Another warning: if you’re just under the threshold, watch out.

Is there a 3.8% Medicare surtax on higher incomes?

The 3.8% medicare surtax on higher incomes seems to be the tax that surprise and annoy many people who find themselves getting hit with it for the first time. The only good news about paying this surtax is that it means you are making more money than 90% plus of Americans.

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