New Taxes to Take Effect in 2013

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The following two new taxes will take effect on January 1, 2013:

1. Investment Income Tax - A new 3.8% tax on investment income, and

2. Earned Income Tax - A new 0.9% tax on earned income

Both of these taxes are imposed by the Health Care and Education Reconciliation Act of 2010. The new taxes are often referred to as “Medicare taxes” because the proceeds will be allocated to the Medicare Trust Fund (part of the Social Security System). These taxes are intended to assist the Medicare Trust Fund in meeting its financial obligations. Some commentators have reported that if it were not for these new taxes, the Medicare Trust Fund might run out of money as early as 2016...

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