• Elimination of 2% payroll tax cut; taxpayers should expect greater FICA withholding from their next paycheck
• Child tax credit ($1,000) is set permanently, its refundable portion through 2017, and the expanded earned income tax credit (EITC) through 2017
• A permanent retention of 10, 15, 25, and 28% income tax brackets
• Taxable income under $400,000 (single), $425,000 (head of household), and $450,000 (joint filers) will not see an increase in their tax rates (remains the same as 2012). Anything above this taxable income level will be taxed at 39.6% (up from 35%)
• Phases out personal exemptions for adjusted gross income over $250,000 (single), $275,000 (head of household) and $300,000 (joint filers)
• Limits itemized deductions for adjusted gross income over $250,000 (single), $275,000 (head of household) and $300,000 (joint filers)
• Capital gains tax and dividends tax will be 20% for taxpayers with income over $400,000 (single) and $450,000 (joint filers). This does not include the new 3.8% health care tax on investment income above $200,000 (single) and $250,000 (joint filers) in adjusted gross income, so the top rate for capital gains and dividends will be 23.8%.
• Permanent set to Alternative Minimum Tax (AMT) exemption at $50,600 (single) and $78,750 (joint filers) for 2012 and adjusts for inflation thereafter
• Extends American Opportunity Tax Credit (education) through 2017
• Permits 401(k) plan participants to convert their plan to a Roth plan, under which contributions are taxed going in but withdrawals are tax-free. 

How to Recover from Holiday Spending in 3 Steps

Now that the holiday season is over, you're probably in an all-out avoidance of your bank statements or dreadfully opening statements to see that saving balances has diminished beyond belief. This isn't the first time it's happen and it probably won't be the last but let's worry about today and get to work to pump some life back into the savings account as well as your household budget!

Step 1: Admittance is the Key. Just admit it, you've fallen off the financial plan; you borrowed from Paul and didn't pay Peter (bought gifts and traveled instead); you maxed out credit and took from emergency savings. You can continue to beat yourself up mentally because of the overspending this holiday season but just admit it and move on. Now is the time to re-evaluate and hit the re-start button to get back on track.

Step 2: Did Emergency Savings Survive? Research to see how much you had in emergency savings before the holiday's started (may have to go back to early November if you participated in the Black Friday and Cyber Monday deals). Is the balance today lower than it was before the holidays and is it because of an emergency (making sure children have the newest video games or coolest gadgets in the WORLD isn't an emergency)? If the balance is less, let's get ready to implement a plan to get the savings back to the same levels. This may require slashing of recreational spending (personal outings, eating out, extra traveling, etc...), you will need to be SUPER FRUGAL until the savings reach a similar balance it once was.

Step 3: New or Existing Credit Card Usage. Once you've replenished the emergency savings account(s), take a look at any new or existing credit cards that may have been utilized during the holidays. If it's an existing credit card, set out a goal to get the balance back to where it was before the holiday spending took off (if you overused the credit card, this could take a while but consider taking the extra money that was being put away to bump back up the emergency savings above to apply towards the credit card balance now).  If you open a new credit or retail card exclusively for holiday spending then aggressively budget to get rid of the card within 4 months if possible (remember, this debt is NEW to you and you'd want to get rid of it as soon as possible in order to get back on the financial plan that was established before the holidays).

Once the steps above are completed, you should be very close to recovery from holiday expenditures and a congratulation is well deserved so I'll be the first to tell you congratulations because I know you can do it! The work doesn't stop here, plan accordingly for the rest of the 2013 year so usage of credit cards and emergency savings don't take place again during the next holiday season. 

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