Wages above about two hundred thousand dollars carry an extra zero point nine percent Medicare tax. Maxing your pre-tax 401(k) pulls your taxable wages down and lowers your exposure.
See how it works through one simple example.
Once your wages cross the threshold, the dollars above it carry an extra zero point nine percent Medicare tax.
Maxing your pre-tax 401(k), up to twenty four thousand five hundred dollars, pulls your taxable wages back down.
Lower taxable wages mean less exposure to the surtax, and a smaller income-tax bill too.
Educational guidance, not tax advice. We confirm every figure and your eligibility before you act.
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The honest version.
Workers whose wages exceed the threshold for their filing status.
Lower your taxable wages, for example by maxing pre-tax retirement contributions.
No, a separate surtax covers investment income.
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