Two Medicare Tax Hikes To Hit High-Earners On Jan 1

High-income earners are going to get hit with two Medicare tax hikes next year, regardless of the outcome of negotiations on the so-called fiscal cliff.

The tax hikes are set to go into effect as part of the Obama administration’s health care legislation. The first is a 0.9% increase in the Medicare payroll tax. The second is a surtax that targets capital gains and other forms of unearned income.

Peter Blank, editor of The Kiplinger Tax Letter, says the latter tax hike will be the more painful

"If you’re over the surtax, or over the surtax thresholds, you’re going to be hit with this 3.8% levy on your net unearned income. And that’s a big bite. It raises the capital gains rate by 3.8%, effectively."

Both tax hikes kick in New Year’s Day for singles earning more than $200,000 a year and married couples earning more than $250,000.

Bio photo of Andrew Schneider

Andrew Schneider

Business Reporter

Andrew Schneider joined KUHF in January 2011, after more than a decade as a print reporter for The Kiplinger Letter...