Tuesday, December 07, 2010

Looks Like We Are Getting A Reprieve

Looks like we will get a reprieve from capital gains tax increases for the next couple of years.

Why this couldn't have been decided months ago I have no idea. Makes no sense to raise taxes until we get this economy back on track.

Here are some of the highlights- but nothing has been passed just yet. I believe it will happen very soon.

Individual tax rates: The agreement would extend the Bush-era tax rates for two years for all taxpayers. Current rates would remain in place, with a top rate of 35%.

Capital gains: Current rates would be extended, and the top rate on long-term capital gains would remain at its historic low of 15% for two years. The rate applies to gains on assets held longer than a year.

Dividends: Current rates would be extended, and the top rate for qualified dividends—those on most stocks held longer than two months—would remain 15% for two years.
Payroll tax: The agreement calls for a two-percentage-point cut in the employee's portion of payroll (FICA) taxes, just for 2011. The change would make the tax 4.2% instead of 6.2% on the first $106,800 of wages per worker, according to the nonpartisan Tax Policy Center. No phase-in or phase-out or other limit was specified by the White House document, so the maximum a working couple could pocket is $4,272—$2,136 per individual wage-earner.

Alternative minimum tax: A two-year "patch," for 2010 and 2011, would keep the AMT exemption at or near current levels. Without the patch, 21 million additional taxpayers would owe AMT for 2010.

Estate and gift tax: No language on the estate or gift tax appeared in the document released by the White House, but a source familiar with the framework said it includes an estate-tax provision for 2011 and 2012 that has a top rate of 35% and an exemption of $5 million per individual.

Stay tuned for more info over the next week or two.

Paula Straub