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The U.S. tax system is a progressive one, meaning the more money you make, the higher your taxes. Tax law changes in recent years demand even more of high earners:
- The American Taxpayer Relief Act of 2012 hiked tax rates on wealthy individuals’ ordinary and investment income.
- The same law reduced some ways richer taxpayers can lower their tax bills.
- Two provisions in the Affordable Care Act, or Obamacare — which remains in effect — hit taxpayers at the top.
While all these taxes are aimed at higher-income taxpayers, there is no particular income level at which a person is considered, for tax purposes, rich.
“Pretty much a different salary level is applied to different types of income,” says Mark Luscombe, CPA and principal federal tax analyst for Wolters Kluwer Tax & Accounting.
Tax rule changes may be coming again soon. But for now, more well-to-do individuals remain targeted by these five taxes.