Rescued from the Fiscal CliffSubmitted by Mission Financial Planning on January 4th, 2013
There are many details yet to be researched and hammered out, but taxpayers were “saved” from the fiscal cliff in the nick of time.
Points in the new tax bill that will be of most interest to our clients:
• The new 39.6% tax bracket starts at $450,000/400,000 (Married filing joint/single). People in that tax bracket will also see an increase in their qualifying dividends and capital gains rates.
• Everyone else got a “permanent” extension of the Bush-era tax cuts, and their capital gains rate remains at 15%.
• Everyone else: before you get too happy, the Alternative Minimum Tax (AMT) is subject to a flat 26% rate on income up to $175,000 and 28% thereafter.
• Payroll taxes are back to “normal”, 2% higher than last year.
• Exemptions and deductions will be phased out over $300,000/$250,000
• Section 179 was extended for 2013, this allows for the immediate expensing of qualifying business assets, including software
• The estate, gift, and GST tax exclusions remain at $5 million, and spousal portability is continued. Great news.
Talk to us about these and other changes that will affect your particular situation and to create strategies for adapting to this new legislation.
Prior to engaging in any transactions that may be affected by the new tax bill provisions, consult with competent tax counsel to determine the tax implications of the proposed transactions. This advice isn’t intended or written to be used for the purpose of avoiding penalties and cannot be used for that purpose.