In 2012, the highest income tax rate
(U.S./California combined tax rate) was 42.99%: Federal tax rate: 35%;
California tax rate: 12.3%.
In
2013, the highest income tax rate is 51.7% (Federal tax rate: 44.3%,
California tax rate: 13.3%; the 51.7% tax rate applies to wage earners).
For
investors the top rate on net investment income is 50.92% (Federal tax rate:
43.4%, California tax rate: 13.37%) (A 20% tax increase over 2012).
The top tax rates apply to U.S. taxpayers who earn income over certain
levels, see below.
2013
Income Taxes (U.S./California)
California Income Tax
Income over $250,000 is taxed at 12.3%. Income over $1,000,000 is taxed at 13.3%
(don't forget the additional 1% mental health tax). These tax rates will apply through 2018.
2013/Highest
California Tax Rate: 13.3%
U.S. Income Tax (2013)
Income
Individuals (over $400,000), Heads of Household (over
$425,000); Marrieds (over $450,000) Tax Rate is: 39.6%
Medicare Surtax
Net Investment Income
Individuals/Heads of Household
(Modified Adjusted Gross Income ("AGI") over $200,000)
Married Taxpayers (over $250,000)
Married filing separately
(over $125,000) Tax: 3.8%
The 3.8% Medicare surtax on
net investment income is levied on the lesser of:
1. Taxpayer's net investment income; or
2. The excess of modified
adjusted gross income over the applicable dollar threshold (modified AGI is
AGI plus any tax-free foreign earned income).
Investment income includes: interest, dividends, capital gains, annuities,
royalties and passive rental income. Tax-free interest is exempted, along
with pay-outs from retirement plans such as 401(k)s, IRAs, deferred pay plans
and pension plans.
Earned Income
(Wages and Self-Employment Income)
Individuals/Heads of Household
(Total Earnings over $200,000)
Married Couples
Joint Returns/Earnings over $250,000
Filing Separately/Earnings over $125,000 Tax: 0.9%
This surtax applies only to
the employee's share of Medicare tax. Employers don't owe it. Employers will
withhold the surtax once an employee's wages exceed $200,000. Employees will
then calculate the actual tax due on their Form 1040 tax returns.
2013/Highest U.S. Tax Rate: 44.3%
(Includes Medicare Surtaxes on Net Investment Income and Earned Income)
Summary 2013/Combined U.S./California Tax (Top Rates): 57.6%
"Blended" U.S./California Tax (Top Rates): 51.7%
For taxpayers (individual) who have income over $400,000, including net
investment income over $200,000 (modified adjusted gross income), and earned
income over $200,000 (wages and self-employment income), the combined top tax
rate is 57.6%, the "blended" top tax rate is 51.7%.
For investors (who do not have wages and self-employment income) the combined
top tax rate is 56.7%; the "blended" top tax rate is 50.92%.
In addition, taxpayer wages of $113,700 (maximum Social Security wage
base/2013) are subject to an additional $8,698 in "payroll tax",
paid by taxpayer (who is an employee or self-employed), calculated as 7.65%
of $113,700 (which includes 6.2% Social Security (FICA) tax, 1.45% Medicare tax).
