On January 2, 2013, President Obama signed into law the 2012 American Taxpayer Relief Act. This avoided the tax side of the “Fiscal Cliff”.
Highlights of the major provisions include:
- Individuals with income over $400,000 and joint filers over $450,000 will pay more taxes in 2013 because of a higher 39.6% income tax rates and a 20% maximum capital gains tax;
- The AMT has been patched for 2012 and subsequent years. All now refundable credits are allowed to the full extent of the taxpayers regular and AMT liability;
- Itemized deductions are limited for high earners;
- Personal exemptions are phased out for high earners;
- The maximum estate tax rate is 40% with inflation adjusted 5 million dollar exclusion;
- Portability between spouses regarding their unused exemption amount has been made permanent;
- Retroactively extend tax provisions such as the research credit;
- Provides 50% bonus depreciation for qualified property placed in service, in years 2013 and later;
- The Act does not extend the 2% point cut in payroll and self-employment taxes;
- It does not repeal any newly effective Medicare taxes.
To read the full overview, please click here.