It is expected that President Obama will sign today The American Taxpayer Relief Act passed by Congress last night.
What will this mean for you?
1. The 2% reduction in payroll taxes for FICA expired on December 31, 2012. Accordingly, payroll tax will go back to 6.25%, from the reduced rate of 4.25%;
2. The Alternative Minimum Tax higher exemption amount was made permanent;
3. The Personal Exemption Phaseout is reinstated with a starting threshold of $300,000 for joint filers and a surviving spouse, $275,000 for heads of households, $250,000 for single filers and $150,000 each for single filers filing separately;
4. The Income tax rate is increased from 35% to 39.6% for joint filers with incomes of more than $450,000 ($400,000 for individuals, and $425,000 for heads of households);
5. Dividends and capital gains will be taxed at 20% (rather than 15%) for individuals making more than $400,000 or for joint filers making more than $450,000;
6. Various tax credits for businesses and individuals were extended.