READY FOR THE FALLOUT FROM THE FISCAL CLIFF TAX DEAL?? BILL WALSTON
The Act returned the personal exemption phase out and a limitation on itemized deductions that had been
repealed when the Bush tax cuts were enacted, and permanently indexed the AMT individual exemption
amounts for inflation. Furthermore, the Act extended a variety of previously extended temporary tax provisions
set to expire, commonly referred to as "tax extenders," which affect individuals, businesses, charitable giving,
energy, community development, and disaster relief. This includes the very popular ‘bonus depreciation” and
Section 179 expensing.
Overall, the Act will at least provide some certainty for taxpayers by making many permanent changes instead of
temporary provisions that leave us wondering what the heck is going on.
Here is a summary outlining many key provisions of the Act. Note that this is a summary, and as such, omits
important details. You should consult your tax advisor before taking any steps regarding your personal tax
planning.
Income Tax Rates
Here's a quick look at the 2013 and individual income tax rates:
In 2013, the top marginal income tax rate goes up from the current 35% to 39.6% for the newly defined rich.
This means those of us making above $400,000 ($450,000 for those filing jointly). These amounts will be
indexed for inflation for the years following 2013. The 10% to 35% rates for taxpayers below the $400,000
threshold had been made permanent.