Trumpcare - 2 Yuge Tax Implications
posted on Sun, Jun 25, 2017
As always, this is not an opinion piece. For my full stance on the Better Care Act (BCRA) you’ll have to wait for my exclusive Rachel Maddow interview airing soon. For now, we can look at the tax implications if the current BCRA is passed through the senate.
The BCRA proposes a vast amount of tax cuts from the Affordable Care Act (ACA) or Obamacare. They range from eliminating tax penalties on employer and individual mandates requiring you to have health insurance to removing excise taxes on medical devices and tanning salons. At least now I will be able to get an affordable base tan for my upcoming Jersey Shore vacation.
There are two tax cuts that will affect the tax planning and investment strategies of my clients the most:
1) Capital Gains Tax - Under the current ACA you are assessed an extra 3.8% surtax on capital gains, dividends, and interest income for families earning $250,000 or more (individuals $200,000 or more). This surtax was put in place to help fund medicare. Under the new BCRA this tax will go away.
2) Medicare Wage Surtax - Under the current ACA you are assessed a 0.9% surcharge for all wages or self-employed income greater than $200,000 for individuals and $250,000 for married couples. This surcharge was put in place to help fund medicare. Just like the capital gains tax above, this will also go away under the current BCRA proposal in front of the senate.
In short, if you earn more than $200,000 as an individual or $250,000 as a family it would be a good time to talk to your CPA and/or financial advisor to discuss any changes in strategy.
Please feel free to contact me anytime to discuss this topic or any other in more detail.