What are the highest potential tax rates for the highest income earning taxpayers in 2014?
Higher income taxpayers are going to pay more in taxes for the tax year 2014.
1. The top marginal tax rate for taxpayers is now 39.6%. The 39.6% tax rate kicks in at $400,000 for individual taxpayers and $450,000 for married couples filing jointly.
2. Previously, all wages were subject to Medicare tax, however, effective 2014, taxpayers who make over $200,000 ($250,000 for married taxpayers) will now be subject to the Medicare surtax. The amount of the Medicare surcharge is .9%.
3. Now, even if a taxpayer is not affected by the Medicare tax surcharge, that taxpayer may be subject to the 3.8% Net Investment Income Tax (NIIT) if both net investment income and modified adjusted gross income (MAGI) of at least $200,000 for an individual taxpayer and $250,000 for taxpayers filing as married.
Net investment income includes items like "interest, dividends, capital gains, rental and royalty income, and certain income from businesses. It doesn’t include wages, unemployment compensation, operating income from a nonpassive business, Social Security Benefits, alimony, tax-exempt interest, self-employment income, Alaska Permanent Fund Dividends and distributions from certain Qualified Plans."