On December 17, 2010, President Obama signed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, which extended certain tax cuts for two additional years. The highlights of this piece of legislation are as follows:
~ Individual Income Tax Rates will remain the same, at 10, 15, 25, 28, 33 and 35 percent, based on taxable income
~ Capital Gains and Dividend Tax Rates will remain the same at a maximum rate of 15 percent (28% for collectibles)
~ The Alternative Minimum Tax (AMT) exemption amounts will increase, to help protect middle income taxpayers
~ Employees will pay less in social security taxes during the year 2011, a decrease from 6.2 percent to 4.2 percent of wages up to $106,800
~ The Estate Tax has been reinstated at a maximum rate of 35 percent, with a $5 million exclusion amount
~ The Gift Tax has been reunified with the estate tax, with a maximum rate of 35 percent, and applicable exclusion amount of $5 million
~ The American Opportunity Tax Credit has been extended
~ The following tax incentives have also been extended through 2011: State and local sales tax deduction; Teacher's classroom expense deduction; Tax-free distributions from IRA's for charity; Higher education tuition deduction
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