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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

Blog posts made available to you are informational only and are not intended to provide investment advice, or supplement the advice of a professional advisor. There is not and can not be a guarantee of their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. You are encouraged to seek personalized advice from qualified professionals regarding all personal finance issues.

Blog posts made available to you are informational only and are not intended to provide investment advice, or supplement the advice of a professional advisor. There is not and can not be a guarantee of their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. You are encouraged to seek personalized advice from qualified professionals regarding all personal finance issues.

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Blog posts made available to you are informational only and are not intended to provide investment advice, or supplement the advice of a professional advisor. There is not and can not be a guarantee of their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. You are encouraged to seek personalized advice from qualified professionals regarding all personal finance issues.