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.

The American Taxpayer Relief Act 1/2/13
Tagged on:         

Leave a Reply

Your email address will not be published. Required fields are marked *