Our annual income levels impact more than just our federal and state income tax brackets. Below is a list of taxes and premiums impacted by exceeding various income thresholds. It is important to understand the total impact of higher levels of income, especially when generating more income is optional, such as through a Roth IRA conversion. Contact your financial advisor if you would like additional information on these thresholds.
Impact of additional income beyond standard tax brackets
| Federal Capital Gains not taxed | Married Filing Joint: If taxable income is below 80,800 Single Filers: If taxable income is below 40,400 |
| Federal Capital Gains taxed at 15% | Married Joint Filers: If taxable income is 80,801 – 501,600 Single Filers: If taxable income is 40,401 – 445,850 |
| Federal Capital Gains taxed at 20% | Married Joint Filers: More than 501,600 taxable income Single Filers: More than 445,850 taxable income |
| Federal Taxation of Social Security Based on Modified Adjusted Gross Income (MAGI) which includes tax-exempt income | Married Joint Filers: Less than 32,000 (not taxed) 32,000 – 44,000 (up to 50% subject to tax) 44,001 and above (up to 85% subject to tax) Single Filer: Less than 25,000 (not taxed) 25,000 – 34,000 (up to 50% subject to tax) 34,001 and above (up to 85% subject to tax) |
| Vermont Taxation of Social Security Based on Federal Adjusted Gross Income (AGI) | Married Joint Filers: 0 – 60,000, full exemption, not taxed 60,001 – 69,999, partial exemption 70,000 and above, fully taxed Single Filers: 0 – 45,000, full exemption, not taxed 45,001 – 54,000, partial exemption 55,000 and above, fully taxed |
| Net Investment Income Tax of 3.8% is assessed on investment income if AGI is above: | Married Joint Filers: 250,000 Single Filers: > 200,000 |
| Vermont property tax adjustment | Significant increase in tax if Vermont Household Income is above $89,999 |
| Medicare premium surcharge is assessed if Modified Adjusted Gross Income (MAGI) is above: | Married Joint Filers: 176,000 Single Filers: 88,000 |
| VT Health Connect premium assistance | Varies by plan & family size, most beneficial for those with lower income and larger families |