No, there is not a typo on the title to this post.
Pease refers to the a new provision of tax law, courtesy of the end-of-the-year fiscal cliff deal, and is named after former Rep. Donald Pease (D., Ohio).
If your adjusted gross income is over $250,000 ($300,000 filing jointly), you should get ready to “eat your Pease,” because the Pease provision is going to result in what the Wall Street Journal calls a “stealth tax.” Hidden away from easy public scrutiny–far, far way from the easily viewed and much-discussed tax rates–is the Pease provision.
You may think that just because you don’t have income at the level that will push you into the new higher 39.6 tax bracket,($400,000 or $450,000 filing jointly), you’re home free. You’re not.
President Obama promised to raise taxes on those “millionaires and billionaires” making more than $250,000, and, by golly, he has kept his promise.
If your adjusted gross income is over $250,000 ($300,000 filing jointly), you will see the benefit of your prized tax deduction decrease this year. The limitation on itemized deductions for higher-income earners is accomplished through the stealth tax Pease provision of the new tax law.
Today’s Wall Street Journal has an article entitled “How Much Will Your Taxes Jump?”
I recommend you read it.
Oh, and one last thing, even if your income is not at the level that the Pease provision affects you, the odds are good that you’re going to be paying higher taxes this year anyway. We heard a lot last year about the 1% and the 2%–well, there’s another 2% that is relevant to 2013’s tax laws, and that is the 2% increase in the employee’s share of the Social Security payroll tax. Last year, you paid 4.2% on the employee’s share of the Social Security Tax. This year you’re going to pay 2% more–up to 6.2%.
Enjoy your higher taxes, everyone!