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3.8 percent Obamacare tax remains law, as does a more limited individual AMT

Louis Jacobson
By Louis Jacobson December 20, 2017

As a presidential candidate, Donald Trump pledged to eliminate one of the key tax provisions from the Affordable Care Act, the health care law passed under President Barack Obama.

Trump said that under his tax plan, "the 3.8 percent Obamacare tax on investment income will be repealed, as will the alternative minimum tax."

On Dec. 19 and 20, the Senate and the House passed the final version of the tax bill, which will go to the president for his signature.

So did lawmakers end the 3.8 percent tax enacted under the Affordable Care Act? No, it remains in place, despite the bill's ending of another element of the law -- the penalty for not having health insurance.

As for the second part of his promise, the bill doesn't eliminate the alternative minimum tax for individuals. This tax is levied on higher-income households that take a lot of deductions, to ensure that they pay at least a minimum amount of tax.

Under the bill, the threshold for the individual alternative minimum tax will rise from $164,000 for joint filers to $1 million. That means that fewer households will face the tax, but it doesn't go away, as promised. (In addition, the provision sunsets after 2025.)

The 3.8 percent tax isn't ending, and while the reach of the alternative minimum tax will be limited, it isn't ending, either. We rate this Promise Broken.

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