On top of that, higher-income taxpayers could see their itemized deductions and personal exemptions phased out and pay higher capital gains taxes — 20 percent for some taxpayers. And there are new taxes for them to help pay for health care reform.
There are different income thresholds for each of these new taxes.
An additional 0.9 percent Medicare tax, for example, kicks in on earnings over $250,000 for married couples filing jointly and $200,000 for singles and heads of household. Same for a 3.8 percent tax on investment income.
But the phase-out of personal exemptions and deductions doesn’t begin until $300,000 for married couples filing jointly and $250,000 for singles.
Taxpayers will still be able to deduct their medical expenses, but it will be more difficult for many to qualify. The threshold for deducting medical expenses now stands at 10 percent of adjusted gross income, up from 7.5 percent. There’s an exception, though, for those older than 65. For them, the old rate is grandfathered in until 2017.
It is good to hear that at least some things are changing when it comes to asking the wealthy to pony up a little more of their mammoth discretionary income for the good of the country and for the basic welfare of its citizens. While these gains (you probably say loses if you are on the receiving end) are notable they is still a long way to go in this area…