The 2012 American Taxpayer Relief Act (ATRA) and the Affordable Care Act (ACA) instituted higher rates and eliminated deductions and exemptions at high income levels, which caused many Americans to experience sticker shock at their increased tax obligations.
As we know, ATRA raised the top ordinary income tax bracket and increased the maximum rate on capital gains and qualified dividends. It revived and permanently reinstated the phase-out of both itemized deductions (Pease Limitation) and Personal Exemptions Phase-out (PEP). In addition to changes from ATRA, the ACA introduced the 0.9% Medicare Hospital Insurance (HI) and the 3.8% Surtax on Net Investment Income (NII). A summary of the implications of these taxes for a married couple, filing jointly, is below.
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