NOTE: Below is taken directly from an email I received. We thought this info would be useful. Tom Ritchie is a bank board member. You may remember him as a regular speaker at our Executive Luncheon Series in the past few years.
The House of Representatives passed the Senate negotiated amendment to H.R. 8, a bill to avert the fiscal cliff, which will be known as the Taxpayer Relief Act of 2012 (2012 Relief Act) that prevents the increase of tax for 98% of Americans and puts a delay on the required automatic budget sequester until March 1, 2013.
Included in the 2012 Relief Act are the following tax items:
- The AMT patch is put in place for 2012 and will be indexed for all years thereafter.
- The extenders for individuals and business will be extended for two years in line with the action taken by the Senate
- Finance Committee in August of 2012.
- Current tax rates would be permanently extended to taxpayers with incomes less than $450,000 (married) and
- $400,000 (single). For incomes above those levels the marginal rate would increase to 39.6%.
- The temporary 2% payroll tax holiday for employees (and self-employed) will not be extended and the rate returns to
- 6.2% as of January 1, 2013.
- 50 % Bonus depreciation is extended for one year.
- Tax rates for capital gains and dividends will increase to 20% for those with incomes greater than $450,000 (married) and $400,000 (single) and will remain at 15% for those with lesser incomes.
- The estate tax rate will top out at 40%, plus, the exemption will be $5,000,000 and indexed for inflation.
- Personal exemption phase out is set at $250,000 and the itemized deduction limitation is set at $300,000.
There are a number of non-tax provisions and a new Commission included in the 2012 Relief Act, plus more detail on the tax provisions that will be reported as the legislation is continued to be studied over the new few days.
A final comment...there was an interesting theme presented by many of the Republicans speaking during the debate time, led by the Chair of the Ways and Means Committee, which could be summarized as....this is all the increasing tax items that are going to be considered as the debt ceiling and budget sequester issues come to be faced. However, the Democrats did not let the comments be made without rebuttal, saying don't consider this vote as such. What it points out is that the issue of more tax increases in 2013, and not necessarily just tax reform, will be a continuing politically charged discussion, particularly in the debt ceiling debate. As always more to come....
And with that being said:
Happy New Year!
Tom E. Ritchie, CPA
Eide Bailly LLP
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Tulsa, OK 74114
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