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Here is a summary of the provisions included in the bill, which the President is expected to sign.
Tax rates beginning January 1, 2013
A top rate of 39.6% (up from 35%) will be imposed on individuals making more than $400,000 a year, $425,000 for head of household, and $450,000 for married filing joint.
2% Social Security reduction for employees payroll is gone beginning 1/1/2013
AMT permanently patched
A permanent AMT patch, adjusted for inflation, will be made retroactive to 2012 but patched for 2012
Dividends and capital gains
The maximum capital gains tax will rise in 2013 from 15% to 20% for individuals taxed at the 39.6% rates (those making $400,000, $425,000, or $450,000 depending on filing status, as noted above).
Itemized deduction and personal exemption phase-outs
The Pease itemized deduction phase-out is reinstated, and personal exemption phase-out will be reinstated in 2013, but with different AGI starting thresholds (adjusted for inflation): $300,000 for married filing joint, $275,000 for head of household, and $250,000 for single.
The estate tax regime will continue to provide an inflation-adjusted $5 million exemption per person (effectively $10 million for married couples) but estates with values over this threshold will be taxed at a higher 40% rate (up from 35% in 2012).
Personal tax credits
The $1,000 Child Tax Credit, the enhanced Earned Income Tax Credit, and the enhanced American Opportunity Tax Credit will all be extended through 2017.
Other personal deductions and exclusions
The following deductions and exclusions are extended through 2013:
Monica Rebella, CPA/IAR
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