By now, of
course, you've heard that Congress has passed legislation avoiding the tax
increases of the "Fiscal Cliff."
Few of us who watched the process would consider it Washington's finest
hour. But we finally have answers to the
questions that have made proactive planning so difficult. Here are the highlights:
• The Bush tax cuts are restored for income up
to $400,000 ($450,000 for joint filers).
Rates for income above those ceilings rise to 39.6% for ordinary income
and 20% for qualified corporate dividends and long-term capital gains.
• The Alternative Minimum Tax is finally
indexed for inflation, meaning Washington won't need to "patch" it
every year.
• The estate tax "unified credit"
amount that you can bequeath tax-free remains at $5 million, indexed for
inflation. The actual rate rises from
35% to 40%.
• The 2% payroll tax holiday has expired, most
likely for good.
The legislation
also extends several popular tax breaks, like higher limits for business
equipment expensing, deductions for student loan interest, and tax-free
charitable gifts made directly from Individual Retirement Accounts.
We realize
you've already heard this news. But we
want you to know we'll be studying the new law in the coming weeks and months
to look for every opportunity to help you save.
And of course, if you have any questions, don't hesitate to call us at
217-241-4597.
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