The 2010 Health Care Act Creates a New Tax Starting in 2013

Financial Institutions

January 01, 2013
by Jessica Mac Naughton, CPA

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Jessica Mac Naughton Jessica Mac Naughton, CPA

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Beginning January 1, 2013, the 2010 Affordable Care Act creates a new Medicare contribution tax on net investment income for individuals, trusts, and estates. For individuals, the tax is imposed when individuals have income greater than $250,000 for married filing jointly taxpayers or $200,000 for single taxpayers. The 3.8% tax is the lesser of the net investment income or the excess of the taxpayers modified adjusted gross income over the threshold. What is "net investment income" and what is "modified adjusted gross income"?

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