Highlights of the American Taxpayer Relief Act of 2012 (HR:8)
- Raises the top tax rate to 39.6% for married couples earning $450,000; single taxpayers earning $400,000 (up from 35%).
- Raises long-term capital gains and qualifying dividends tax rate to 20% (from 15%) for taxpayers in the 39.6% tax bracket.
- Permanently extends Bush-era tax cuts for 2001 and 2003 for all others.
- Reinstates phase-out of personal exemptions and itemized deductions for married couples over $300,000 and singles over $250,000.
- Raises the maximum estate tax rate to 40% on individual estates over $5 Million, family estates over $10 million (this is up from 35%).
- Extends for 5 years (through 2018) American Opportunity (education) and increased EIC (earned income credit) for certain families.
- Extends through 2013 several individual tax benefits; teacher expenses, relief of cancellation of debt income on personal residences, deductible mortgage insurance premiums, election to deduct sales taxes in lieu of income taxes, tuition deductions, tax free distributions from IRA to charity.
- Extends 50% bonus depreciation through 2013 (business owners).
- Extends through 2013 certain energy tax incentives.
- Patches AMT adjustments for inflation (alternative minimum tax)
- Extends through 2013 certain specialized business tax provision (research, new markets, work opportunity, Sec. 179 $500,000, etc)
Many of these deductions and credits expired 12/31/2011 but were reinstated and extended into 2012 - 2013, some to 2018 as indicated above.
FICA tax on employment increased from 4.2% to 6.2% and from 10.4% to 12.4% for self-employed persons. This increase was scheduled to take place January 1, 2013 regardless of congressional action.
