Initially, taxpayers weren't required to pay Medicare tax on income generated from investments such as capital gains, dividends, and taxable interest. Medicare tax exposure may include "unearned" income from rental property, the sale of investments, royalties, and other forms of passive income. 3.8% Medicare surtax is levied on the lesser of net investment income or the excess of modified adjusted gross income (MAGI) for different categories like individuals, joint filers.
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