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Tax Law Changes Beginning in 2013
If you have AGI above $250,000 ($200,000 for singles) you’re among the wealthiest Americans, and the items below will likely affect you.
- A 3.8% Medicare surtax on net investment income, including interest, dividends, capital gains, royalties and passive rental income. Tax-free interest is exempted.
- A 0.9% Medicare surtax on earned income, such as wages and self-employment income.
- For those with taxable income over $450,000 ($400,000 if single), the top tax bracket is now 39.6% (up from 35%), and dividends and long-term capital gains will now be taxed at 20% (up from 15%).
Other tax changes effective beginning in 2013 include:
- The annual gift tax exclusion is now $14,000. Couples can give $28,000 in annual gifts to an individual without paying any gift taxes or filing gift tax returns.
- The estate and gift tax exemption for 2013 is now $5,250,000. The tax jumps to 40%.
- You may contribute up to $17,500 to a 401(k) account ($23,000 if you’re over age 50).
- You may contribute up to $51,000 if you have a defined contribution plan, such as a SEP-IRA or profit sharing plan.
- The 2013 contribution limit for IRAs and Roth IRAs is $5,500 ($6,500 if you’re over age 50).
- Flexible spending accounts, in which you can use pre-tax dollars to pay for medical expenses, are now limited to $2,500 (down from $5,000).
If you would like to discuss your personal situation in detail, please call us at (415) 925-3400.