Bloombergs tax plan explained. As part of President Trump’s signature legislation–the Tax Cuts and Jobs Act–the top rate on ordinary income–things like wages, business income, and interest income, was reduced from a high of 39.^% to 37%. Of course, the U.S. tax system is a progressive system, meaning we pay higher taxes as our income increases. under the current structure, those rates begin at 10% and then climb to 37% via the following steps, 12%, 22%, 24%, and 35%. It’s also important to note that there is an additional 3.8% surcharge that applies to the “net investment income” of certain high income individuals–things like interest income or income from a business in which you don’t actively participate–meaning the top rate on these forms of income can reach a high of 40.8%. Bloombergs tax plan explained. Bloombergs proposal, has promise to increase the top IRS tax bracket back to 39.6%, presumably without changing the income level at which the rate applies. Thus, under his plan the top rate would kick in at approximately $510,000 of income for a single taxpayer and $612,000 for those married filing jointly. Then to extract additional revenue from the nation’s richest –the common denominator among all Democratic tax plans released to date–Bloomberg would assess a surtax of 5% on IRS income above $5 million. That would increase the top rate on ordinary income to 44.6% before accounting for the 3.8% net investment income tax. Thus, the top rate on interest income for passive business income would reach a high of 48.4% Bloombergs tax plan explained.

Long term capital gains and qualified dividends are currently taxed at a high of 20%, though most Americans pay 15%, with those in the 10% and 12% brackets paying 0%. Of course, you have to tack on net investment income tax of 3.8% so the rate reaches a high of 23.8%. Bloombergs plan, like all his Democratic counterparts, would increase the top rate to a top rate of 43.4%, 39.6% and 3.8% in total.

If you have unfiled tax returns or a tax debt, our 36 year old Tax Resolution Company can and will help you. We can file all past due returns, then determine your options for Tax Relief in the IRS Code, so you don’t have to deal with a IRS Wage Garnishment. Tax Resolution our way is stress free. Our Tax Resolution Services are Nationwide. Call for a free Tax Consultation today. 1-888-689-7861