Here’s a list of seven ObamaCare tax hikes that affect the middle class.
1. The Individual Mandate Excise Tax.
Starting in 2014, anyone not buying “qualifying” health insurance must pay an income tax surtax. It goes up each year until 2016 and beyond when a couple would pay a tax of the higher of $1,360 or 2.5% of adjusted gross income.
2. The Over-The-Counter Drugs Trap.
Since Jan. 1, 2011, employees with health savings accounts, flexible spending accounts or health reimbursement accounts have no longer been able to use pre-tax funds stashed in these accounts to buy over-the-counter medicines for allergy relief and the like without a doctor’s prescription (there’s an exception for insulin).
3. The Healthcare Flexible Spending Account Cap.
Starting Jan. 1, 2013, employees will face a $2,500 cap on the amount of pre-tax salary deferrals they can make into a healthcare flexible spending account. There is no cap under current law. In light of the new cap, employee benefits groups are lobbying for Congress to modify the use-it-or-lose-it rule that means employees forfeit unused funds in their accounts at the end of the plan year.
4. The Medical Itemized Deduction Hurdle.
Starting Jan. 1, 2013, taxpayers who face high medical expenses will only be allowed a deduction for expenses to the extent they exceed 10% of adjusted gross income, up from 7.5% now. Taxpayers 65 and older can still use the old 7.5% threshold through 2016. For how to score the medical expense deduction before 2013, click here.
5. The Health Savings Account Withdrawal Penalty.
Since Jan. 1, 2011, taxpayers who withdraw money from health savings accounts for non-medical expenses before age 65 face a 20% penalty, up from 10% before.
6. The Indoor Tanning Services Tax.
Since July 1, 2010, folks using indoor tanning salons face a new 10% excise tax. This one hasn’t been bringing in as much revenue as anticipated.
7. The Cadillac Health Insurance Plan Tax.
Starting in 2018, there will be a new 40% excise tax on taxpayers who are covered by high-cost health insurance plans (with premiums at or above $10,200 for a single or $27,500 for a family). Insurers or employers who are self-insured will pay the tax, but it is expected to trickle down to mean higher costs for consumers.
Americans For Tax Reform has a full list of ObamaCare’s 20 new or higher taxes on American families and small businesses.