New Taxes Accompany Health Care Law
With implementation of the Patient Protection and Affordable Care Act (PPACA or “ObamaCare”) already underway, taxpayers need to be on the lookout for several new taxes contained within the law. http://www.forbes.com/sites/gracemarieturner/2013/01/02/as-2013-begins-get-ready-for-an-obamacare-tax-onslaught/. The new taxes hit everything from medical devices to capital gains and could potentially impact many Americans.
The tax with perhaps the biggest potential impact is the new surtax on investment income for individuals making more than $200,000 a year or couples that make more $250,000 a year. Individuals and couples subject to the tax must pay a 3.8% levy on income from investments such as the sale of stocks and bonds, securities, and other capital gain property. The surtax on investment income is not indexed for inflation, so more and more families will end up paying the tax as time goes on.
Similarly, a new Medicare tax of an additional 0.9% applies to wages over $200,000 a year for individuals and $250,000 for couples. As a result, the payroll tax for these individuals and couples will total 3.8%.
The medical device tax of 2.3% applies to all gross sales of taxable medical devices. What this means is that the 2.3% tax applies regardless of whether the company paying the tax has made a profit for that year.
Finally, the PPACA raises money through addition by subtraction. The law limits the amount of money that workers can set aside in tax-free flexible spending account to $2,500 a year. The PPACA also increases the threshold for the itemized medical deduction. As a result, an individual’s medical expenses must exceed 10% of their gross income for a given year before they are allowed to deduct those expenses. The previous threshold was 7.5%.