Many business owners and professionals will be shocked when they see their 2013 income tax bill as taxes overall will likely rise 10-15 percent.
The American Taxpayer Relief Act of 2012 (ATRA) added a new top income tax rate of 39.6 percent for ordinary income. Add to that the 3.8 percent Medicare surtax under the Affordable Care Act of 2012 (ObamaCare) and the combined rate becomes 43.4 percent. The top federal rate for long-term capital gains taxes and qualified dividends went from 15 percent to 23.8 percent. Additionally, one owes state income taxes.