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Ring in the New Year with your New Healthcare Taxes

Most of the new healthcare taxes will fall on high income earners, but the middle class and medical device industry will also take a hit.

Directly impacting taxpayers is the Medicare tax hike on high income wage earners, higher taxes on investment income, lower contributions to flexible spending accounts and a higher threshold for deducting medical expenses from income tax. 

The Affordable Health Care Act is funded through the Medicare taxes of high income earners. These taxes hit individuals earning over $200,000, and joint filers earning more than $250,000.  Medicare taxes will go up by .9% for these folks and they will be hit with an additional 3.8% on unearned income.

Also hit will be folks who earn a greater share of their income from investments. Even if their regular income isn't high enough for the additional taxes, their investment income would be hit with an additional 4% tax. The consequence will most likely be less investment.

The cost of the Affordable Healthcare Act will not just hit the "rich." Two new taxes will affect the middle-class. Taxpayers used to be able to deduct health care expenses that total more than 7.5% of their income. Starting in 2013, that threshold will rise to 10%. This deduction is most often utilized by lower income earners with high medical bills.

According to Lindsey Buchholz of the H&R Block Tax Institute, about 10 million taxpayers deduct around $80 billion in health care expenses a year.


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