Medicare Surtax 3.8%

Many of you may not be aware of the new “Medicare Surtax” that will be noticed this tax season by several thresholds of individuals.  This tax is 3.8% and is dependent on two numbers: the taxpayer’s net investment income (NII) and the taxpayer’s modified adjusted gross income (MAGI).  The tax is applied on the lower of the two numbers, which means that people with low investment income will pay less.

Medicare Surtax – Thresholds

  • $250,000 for married couples filing jointly
  • $125,000 for married couples filing separately
  • $200,000 for everyone else

How does the Medicare Surtax Work?

A quick example of how the Medicare Surtax works: John Doe earned $150,000 last year and had $75,000 of net investment income.  The adjusted gross income correlates to $225,000 (total earned and investment income).  Mr. Doe since he is single has a $200,000 threshold.  So the MAGI after being reduced is $25,000 ($225,000 minus $220,000).  So he will receive a tax bill of $950  which is $25,000 times 3.8% Medicare Surtax.

Most people across the country will not have to worry about this tax.  Someone reading this article right now is thinking, “Man I would love to have that problem.”  This is something that everyone should be made aware of so they can plan accordingly.

Medicare Surtax

Offering Supplemental Medicare plans – Medigap and Dental Insurance

If you need help understanding about Medicare, Medicare Supplements or the taxes associated with Medicare email us at seniordivision@morganwhite.com or call us at 1-877-936-2991.  We look forward to working with you and helping you decipher the Medicare system.

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