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Obamacare Taxes: The Secret Reason You'll Pay Them Sooner Than You Think

The Patient Protection and Affordable Care Act, also known as Obamacare, has created a lot of controversy, and many taxpayers are especially unhappy with new taxes that Obamacare created on wages and net investment income above certain limits. Even though those taxes are aimed at high-income taxpayers now, there's one little-known aspect of those taxes that will lead more people to pay them over time.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, explains how the income limits for the 0.9% Medicare surtax and the 3.8% net investment income surtax aren't indexed to inflation. Right now, limits of $200,000 for single filers and $250,000 for joint filers only capture those at the highest income levels. But over time, as inflation raises wages, Obamacare's failure to adjust those limits for inflation will lead to an increasing number of taxpayers having to pay the tax, eventually capturing ordinary middle-class Americans. Dan runs through how the same thing happened with the Alternative Minimum Tax until lawmakers added an inflation-indexing provision last year, and concludes that Obamacare taxes need the same provision in order to avoid snaring millions of unsuspecting taxpayers in the long run.

Don't let Obamacare surprise you
The tax provisions of Obamacare are complex, but you don't have to stay in the dark about how they'll affect you. In only minutes, you can learn the critical facts you need to know in a special free report called "Everything You Need to Know About Obamacare." This free guide contains the key information and money-making advice that every American must know. Please click here to access your free copy.


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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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