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Jan 25 2013
Tax Provisions that Change after 2012
Posted in general
- Individual, Estate, and Trust Income Tax Rates: The income tax rates for individuals, estates, and trusts will revert to 15, 28, 31, 36, and 39.6% after 2012 (§1).
- Capital Gains Tax Rates: Noncorporate taxpayers' long-term capital gains tax rates will increase. The minimum rate of 15% will increase to 20% and the zero rate for taxpayers in the 15% or lower tax bracket will increase to 10% (§1(h)).
- Qualified Dividends: Qualified dividends received by noncorporate taxpayers will be taxed at ordinary income rates, not long-term capital gain rates (§1(h)(11)).
- Increased Standard Deduction for Qualified Taxpayers: The increased standard deduction for married taxpayers that is double that allowed for a single taxpayer will expire after 2012. The standard deduction will revert to 167% of the standard deduction for single taxpayers (§63).
- Limit on Itemized Deductions for Higher-Income Individuals: The 3% of adjusted gross income phase-out of itemized deductions, except for medical expenses. casualty losses, investment interest, and gambling losses, will be reinstated (§68).
- Phase out of Personal Exemptions: Personal exemptions will be subject to a 2% reduction for each $2,500 or part of $2,500 of AGI above thresholds (§151(d)(3)).
- Student Loan Interest Deduction: The deduction will not apply to interest payments after the first 60 months of payments, and the deduction will phase out at lower AGI (§221).
- Child Tax Credit: The child tax credit will revert to $500 and the refundable amount will be limited to taxpayers with at least three qualifying children (§24).
- Child and Dependent Care Credit: The Child and dependent care credit will decrease due to decreases in credit percentage, creditable expenses, and income phase-outs (§21).
- 2% Reduction in OASDI: The OASDI reduction from 6.2% to 4.2% will expire after 2012 (H.R.3630).
Last Updated by Trae Long on 2013-01-25 12:42:36 PM