Origanalist
01-26-2014, 04:25 PM
January 23, 2014
By Kyle Pomerleau
Last year, with the passage of Taxpayer Relief Act of 2012, a number of tax changes were enacted. In addition, a few Obamacare taxes went into force. Although most taxpayers and Americans will be affected by these changes over time, most of the tax changes for this filing season target the highest income earners.
The most notable changes for taxpayers this filing season:
A new 39.6 percent income tax bracket for those making over $400,000
Phase-out of the personal exemption and itemized deductions for those making more than $250,000
A new 0.9 percent tax on Medicare wages for those making more than $200,000
Add these new taxes to state income taxes, such as California’s 13.3 percent income tax rate on those making $1 million or more, and the top marginal tax rate faced by high-income earners can be over 50 percent. A marginal tax rate is the rate your next dollar of income over a certain level is taxed, not to be confused with an average tax rate, which is your total taxes paid over your total income.
Californians face the highest top marginal tax rate on wage income at 51.9 percent, followed by Hawaii (50.5 percent), and New York (50.3 percent). Even high income earners in states with no income tax such as New Hampshire, Texas, and Nevada face top marginal income tax rates over 42 percent. The average across all states is about 48 percent.
Cont....http://taxfoundation.org/blog/high-income-taxpayers-could-face-top-marginal-tax-rate-over-50-percent-tax-season?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%253A+TaxPolicyBlog+%2528Tax+Foun dation+-+Tax+Foundation%2527s+%2522Tax+Policy+Blog%2522%25 29
By Kyle Pomerleau
Last year, with the passage of Taxpayer Relief Act of 2012, a number of tax changes were enacted. In addition, a few Obamacare taxes went into force. Although most taxpayers and Americans will be affected by these changes over time, most of the tax changes for this filing season target the highest income earners.
The most notable changes for taxpayers this filing season:
A new 39.6 percent income tax bracket for those making over $400,000
Phase-out of the personal exemption and itemized deductions for those making more than $250,000
A new 0.9 percent tax on Medicare wages for those making more than $200,000
Add these new taxes to state income taxes, such as California’s 13.3 percent income tax rate on those making $1 million or more, and the top marginal tax rate faced by high-income earners can be over 50 percent. A marginal tax rate is the rate your next dollar of income over a certain level is taxed, not to be confused with an average tax rate, which is your total taxes paid over your total income.
Californians face the highest top marginal tax rate on wage income at 51.9 percent, followed by Hawaii (50.5 percent), and New York (50.3 percent). Even high income earners in states with no income tax such as New Hampshire, Texas, and Nevada face top marginal income tax rates over 42 percent. The average across all states is about 48 percent.
Cont....http://taxfoundation.org/blog/high-income-taxpayers-could-face-top-marginal-tax-rate-over-50-percent-tax-season?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%253A+TaxPolicyBlog+%2528Tax+Foun dation+-+Tax+Foundation%2527s+%2522Tax+Policy+Blog%2522%25 29