The Bush tax cuts expire and the Obamacare taxes kick in on this date. It will really hurt those Americans who pay taxes. Below is a list of some of the changes to our taxes which are already scheduled to happen on 1/1/2013.
1. The 10% tax bracket goes to 15%. The middle 3 brackets all go up 3% points. The highest bracket goes to 39.6% from 35%.
2. The estate tax rate goes from 35% to 55%. The estate tax exemption and the lifetime gift tax exemption drops to $1,000,000 from $5,120,000.
3. The long term capital gains rate increases to 20% from 15%.
4. Qualified dividends will be taxed at ordinary tax rates instead of capital gains rate.
5. Net investment income will be subject to a medicare surtax rate of 3.8% for higher income taxpayers.
6. Higher income taxpayers will also be subject to an additional medicare tax of .9% on wages and self employment income.
7. Families covered by very expensive health care plans will be subject to a 40% excise tax.
8. The threshold for deductible medical expenses increases to 10% from 7.5% making it more difficult for those with big medical or dental bills to get tax benefits from the expenses.
9. The child credit drops to $500 from $1,000.
10. The student loan interest deduction goes away.
11. Exemptions and itemized deductions are limited for higher income taxpayers.
12. The higher alternative minimum tax thresholds are reduced back to a very low threshold. Millions of more taxpayers will be affected by this tax.
13. The child care deduction limit drops to $2,400 from $3,000.
14. The marriage tax penalty is back in play.
15. The American Opportunity college education credit expires.
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