Diagnosis and treatment: understanding and preparing for the new investment income tax: Recent health care legislation creates a new tax on investment income By Keith Peters


First appeared in CPA Focus - May 2010

When President Obama signed the 2010 Health Care Reconciliation Act on March 30, 2010, substantial changes to the nation's health care policy became reality. To help fund these changes, the legislation calls for several tax increases in the coming years. Some of the more notable increases are an excise tax on so-called Cadillac health insurance plans, an increase in the Medicare wage tax paid by some workers and new restrictions on flexible spending accounts. In addition, the legislation adds a new tax on many types of investment income. When combined with rate increases already scheduled to occur, this new tax will result in a drastically higher tax burden on the investment income of many Americans. It is therefore important to understand the application of the new tax as well as planning opportunities that may be available to minimize the tax's impact.

Article authored by McAfee & Taft attorney: Keith Peters.

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