Tuesday, January 1, 2013

The new "fiscal cliff" law

The "fiscal cliff" bill passed by the Senate on New Year's Eve and by the House on New Year's Day includes the following for estate taxes:
  • Retaining the current $5 million per person / $10 million per couple exemption amount. The amount will be indexed for inflation. (The exemption for 2013 is $5.25 million per person.)
  • A modest increase in the top estate tax rate (applicable to those whose assets are more than $1 million over the exemption) from 35% to 40% 
It also would raise taxes on long-term capital gains, for those with incomes over $400,000 per year ($450,000 for married couples), from 15% to 20%.

Extended for five years: the earned income credit, child tax credit, tuition credit.

The 2% holiday for Social Security payroll taxes was allowed to expire. 

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