Higher Taxes on High Earners and Investments to Fund Social Security and Medicare
This Act aims to increase funding for Social Security and Medicare by imposing new taxes on very high earners and investment income. Taxpayers earning below $400,000 annually will generally not see changes to their payroll taxes, but those above this threshold will face increased contributions to social insurance programs. These changes are scheduled to take effect starting January 1 of the first calendar year after enactment.
Key points
Application of the Social Security payroll tax on wages and self-employment income exceeding $400,000 annually, while income between the current contribution base and $400,000 remains exempt.
Introduction of an additional 1.2% Medicare Hospital Insurance tax on earned income above $400,000 (or $500,000 for joint filers).
Expansion of the definition of taxable investment income and an increase in the Net Investment Income Tax (NIIT) rate up to 17.4% for high-income individuals and trusts, with revenue allocated to Social Security and Medicare trust funds.
Expired
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