Estate Planning

Medicare Tax on Investment Income?

By Gregory Herman-Giddens

The U.S. Senate Finance Committee is considering instituting a 1.45% Medicare tax on investment income, including interest, dividends, capital gain, and partnerships and rentals.  Currently long term capital gains and qualified dividends are taxed at a maximum of 15%, while the other types of income are taxed at ordinary income rates.

See this story on Bloomberg.com for details this proposal for paying for health care reform.

I personally would not object too much to this tax if it only applied to investment income over a certain amount, say $25,000 annually.  With unavoidable multiple state and federal income tax increases on the horizon, I think we'll see an increased interest in retirement savings, life insurance and annuities as a way to defer taxes.

Full post as published by North Carolina Estate Planning Blog on July 14, 2009 (boomark / email).