The tax hikes are set to go into effect as part of the Obama administration’s health care legislation. The first is a 0.9% increase in the Medicare payroll tax. The second is a surtax that targets capital gains and other forms of unearned income.
Peter Blank, editor of The Kiplinger Tax Letter, says the latter tax hike will be the more painful
“If you’re over the surtax, or over the surtax thresholds, you’re going to be hit with this 3.8% levy on your net unearned income. And that’s a big bite. It raises the capital gains rate by 3.8%, effectively.”
Both tax hikes kick in New Year’s Day for singles earning more than $200,000 a year and married couples earning more than $250,000.