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2013 IRS and CA Tax Rates

Posted by Admin Posted on Feb 22 2013

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)


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).