The IRS has produced a page on the tax provisions in Obamacare. This post isn’t going to discuss all of the taxes created by the law; instead, I will focus on the taxes that get the most attention.
The tax penalty is the higher of 2.5 percent of your household income or what is called the maximum penalty.. In 2017, the maximum penalty for not having health insurance will be $695.00 for an individual. If children don’t have coverage, the penalty to their parents is $347.50 per child. The most a family could pay under the maximum penalty is $2,085. If you have health insurance for at least 10 months, you are not penalized.
Roughly six million taxpayers are subject to the penalty.
An additional Medicare tax began in 2013. It added a 0.9 percent tax on the wages of high-income earners. For a married couple filing jointly, the 0.9 percent tax attaches to wages of at least $250,000. If a married couple files separately, the tax applies at $125,000. A single filer’s wages are subject to the new Medicare tax at $200,000. This tax has raised enough money to provide Medicare’s Part A, which covers hospitalizations and is funded by the payroll tax, an additional decade of revenue. Remember, wealthy earners get a huge break on the portion of their payroll taxes that fund Social Security.
The Net Investment Income Tax added a 3.8 percent tax to income earned through investments. This tax raised the capital gains tax rate for wealthy taxpayers to 23.8 percent. For married couples filing jointly the tax applies to wages of at least $250,000. If a married couple files separately, the tax applies to wages of at least $125,000. If you are a single filer, the tax hits at $200,000.