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Estate Planning Legal Topics Tax Law

Health Care Reform Includes Surprise Tax Increase for High Earners

On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act (Pub L 111–148, 124 Stat 119). As expected, the health care reform legislation, as amended by the Health Care and Education Affordability Reconciliation Act of 2010 (Pub L 111–152, 124 Stat 1029), includes an additional Medicare tax beginning in 2013 on individuals making over $200,000 per year ($250,000 for joint filers), bringing the Medicare tax rate to 3.8 percent for those individuals. In a surprising development, for the first time in the history of the Medicare program, the new 3.8 percent Medicare tax will apply to the net investment income of those individuals.