New Medicare Tax

[newporttony]

Does anyone have any insight into whether the new 3.8% tax on investment income would apply to municipal bond interest?? I asked the question on the Vanguard forum and the thread was closed because it was deemed (no pun intended) to be too political.

 

[Alan]

Why not ask your question in this thread which is already discussing it.

http://www.early-retirement.org/forums/f52/obamacares-worst-tax-hike-49270.html#post915811

 

[Gone4Good]

The short answer is that it's not clear.

The longer answer . . .

The actual text of the legislation does not specifically exclude muni interest from the tax, nor does it specifically include it. It simply says "interest" will be subject to the tax. But you can't make any assumptions based on that. What the legislation is doing is inserting a provision in to the Internal Revenue Code, so if "interest" is defined to exclude muni-interest in the code, then it will also exclude it as part of this new legislation. But I don't know if that is how it will work, or not.