Now that the dust has settled and the risk of going over the “fiscal cliff” has passed for the time being, it is time to look at some of the things that the American Taxpayer Relief Act of 2012 did.
Estate Tax. The federal estate tax exemption for 2013 will be $5,250,000. Had Congress not passed the Act, the estate tax exemption for 2013 would have dropped to $1,000,000. This would have put many estates at risk for a substantial federal estate tax liability which, by the way, was increased by the Act from 35% to 40%.
Income Tax. The Act made the Bush era tax cuts permanent for individuals making less than $400,000 per year and married couples making less than $450,000 per year. For individuals making $400,000 or more and married couples making $450,000 or more, the maximum income tax rate increased from 35% to 39.6%.
In addition, the “Social Security tax holiday” has officially ended resulting in a 2% increase in Social Security taxes in 2013.
Long Term Care. The Act established the fifteen member Commission on Long Term Care which is charged with developing “a plan for the establishment, implementation, and financing of a comprehensive, coordinated, and high quality system that ensures availability of long term care services and supports.”
This is a very brief summary of some of the things which the Act did. Significantly, it did not address the federal debt limit or the upcoming mandatory federal government spending cuts which will likely have a major impact on all of us.