December 17 the president signed into law the Tax relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. Below is the summary of some of the provisions.
1. Capital Gains Taxes
The sunset rule in the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA): it is scheduled to rise to 20% in 2011 (10% for taxpayers below 25% income tax bracket)
Tax Relief Act: it continues current treatment 15% (0% for taxpayers in the 10 and 15 percent income tax brackets ) for 2 years, through Dec.-31-2012.
2. Individual Income Tax Rates
Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA): it is scheduled to revert income tax rate from 10%, 15%, 25%, 28%, 33%, 35% to 15%, 28%, 31%, 36%, and 39.6%.
Tax Relief Act: it extends all individual rates at 10%, 15%, 25%, 28%, 33%, 35% for 2 years, through Dec.-31-2012.
3. Alternative Minimum Tax
AMT patch--Exemption amounts for 2010 and 2011 with/and without a patch:
|
| 2010 | 2011 |
| Single individuals | 47,450/33,750 | 48,450/33,750 |
| Married couples filing jointly | 72,450/45,000 | 74,450/45,000 |
| Married couples filing separately | 36,225/22,500 | 37,225/22,500 |
4. Payroll Taxes
| Social Security Tax on all wages up to 106,800 | Old | New |
| Employee | 6.2% | 4.2% |
| Self-employed individual | 12.4% | 10.4% |
Tax Relief Act also extend some tax benefits related to the following issues for 2 more years, through Dec.-31-2012
- Enhancement on Child Tax Credit ($1,000)
- Enhancement on Adoption Credit
- Enhancement on Dependent Care Credit
- Enhancement on Earned Income Tax Credit
- Enhancement on Student loan interest deduction
- Enhancement on Coverdell Education Savings Accounts
- Full repeal of the Peace limitation
- Repeal of the Personal Exemption Phaseout
- EGTRRA's marriage penalty
- Employer-Provided Child Care Credit
- American Opportunity Tax Credit
- Educational Assistance Exclusion
- State and local sales tax deduction
- Higher education tuition deduction
- Teacher's classroom expense deduction
- Charitable contribution of IRA proceeds
- Scholarships exemption from National Health Service Corps Scholarship Program and the Armed Forces Scholarship Program
- Mortgage Insurance Premiums (extend 1 year subject to some limitations)
PSQ
Sources: http://tax.cchgroup.com/downloads/files/pdfs/legislation/bush-taxcuts.pdf
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