If you had to do a double-take when you reviewed your 2013 federal individual income tax return, rest assured, you were not the only one surprised by the impact of the new taxes and higher tax brackets that went into effect on January 1, 2013. The tax increases, any of which you may have missed due to the controversy taking place in Congress over the last several years, were imbedded in two different laws.

The two new taxes were directly tied to the Affordable Care Act (ACA), more commonly referred to as Obamacare. The first of these taxes only impacts wages, compensation and self-employment income currently subject to Medicare Tax above certain thresholds. The tax (the Hospital Insurance Tax) is 0.9% of the amount that exceeds $250,000 for a couple filing jointly and $200,000 for a single filer.

The second new tax that debuted in 2013 as part of the ACA was the 3.8% net investment income tax. The calculation of this tax is somewhat of an exercise.  Thankfully, the IRS created the new Form 8960 just for this purpose.  The net investment income tax is also based upon a threshold; the taxpayer's modified adjusted gross income. The threshold is $250,000 for joint filers and $200,000 for single filers. The tax is assessed only on net investment income, so if you reported wages of $300,000 and had no investment income for example, the tax would not come into play.

In addition to the above, the American Taxpayer Relief Act of 2012 added two new tax brackets for high-income earners (wage or investment income) for the 2013 tax year. The new brackets kick in when one's taxable income exceeds $450,000 for a married couple filing a joint return and $400,000 for a single taxpayer. If you are above these thresholds, the top marginal tax bracket for ordinary taxable income rose from 35% to 39.6%. Long-term capital gains rates and the qualified dividend tax rate rose from 15% to 20%. Furthermore, the phase-out of itemized deductions and personal exemptions was reinstated for incomes over $300,000 (married joint) and $250,000 (single).

Now that the dust has started to settle on the 2013 tax filing season, I also wanted to take the opportunity to highlight some strategies that you can take advantage of to minimize the impact of these new and higher taxes. Here are just a few ideas that Schneider Downs Wealth Management Advisors employs to help cut the tax bite:

1. For individuals who are employees, it is more difficult to defer or accelerate your employment income, but for business owners, there may be valid reasons and avenues to smooth income. 
2. Maximize pre-tax contributions to pension and profit sharing plans to lower taxable income. 
3. If you employ fixed income in your investment strategy, consider tax-exempt bonds. Tax-exempt bond income is not included in any of the above calculations. (Note:  Some tax-exempt bonds are subject to the Alternative Minimum Tax.)
4. Avoid short-term capital gains. They are treated as ordinary income, and at the highest marginal level, they can be taxed at 43.4%. 
5. Harvest your tax losses, if you have them, to offset taxable gains.
6. If you are charitably inclined, consider using highly appreciated stock to make charitable gifts. 

The tax laws discussed above (using the 2013 thresholds) are probably going to be with us for some time into the future, so it is not too late to start planning for 2014 and the tax seasons that follow.  My best advice is to talk to your tax professional and your investment advisor to determine what strategies might work for you.