Recent Tax Changes
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Recent Tax Changes
How will the new tax changes affect you or your business?
Lincoln Financial Group Tax Specialist, Tom Commito, breaks it all down for you. Download
his informative
PDF document.
Want the short version? We've narrowed it down to
some topics that affect most of us:
Tom's "Short List"
Congress acted to extend many of the Bush-era tax provisions in late December, but
understanding all of the new information – what has changed and what remains
the same – can be daunting. This checklist highlights some of the key tax
issues that may affect you.
The provisions listed below expire at the end of 2012 unless otherwise noted.
Income taxes
The Bush-era federal income tax cuts were extended; however, the brackets have been
adjusted slightly higher than those of last year due to inflation.
|
Taxable income
|
The tax is
|
Of the amount over
|
Taxable income over
|
The tax is
|
Of the amount over
|
|
$0 - $8,499
|
$0 + 10%
|
$0
|
$0 - $16,999
|
$0 + 10%
|
$0
|
|
$8,500 - $34,499
|
$850 + 15%
|
$8,500
|
$17,000 - $68,999
|
$1,700 + 15%
|
$17,000
|
|
$34,500 - $83,599
|
$4,750 + 25%
|
$34,500
|
$69,000 - $139,349
|
$9,500 + 25%
|
$69,000
|
|
$83,600 - $174,399
|
$17,025 + 28%
|
$83,600
|
$139,350 - $212,299
|
$27,088 + 28%
|
$139,350
|
|
$174,400 - $379,149
|
$42,449 + 33%
|
$174,400
|
$212,300 - $379,149
|
$47,514 + 33%
|
$212,300
|
|
$379,150 or more
|
$110,017 + 35%
|
$379,150
|
$379,150 or more
|
$102,574 + 35%
|
$379,150
|
Dividends and capital gains
The tax rate reductions for long-term capital gains remain at 0% for taxpayers in
the 10% and 15% income tax brackets, and 15% for taxpayers in the 25% income tax
bracket and above.
Estate tax exemption and tax rate
The estate tax exemption is set at $5 million per individual for estate, gift, and
generation skipping taxes. The maximum estate tax rate (applied to assets over and
above the exemption amount) is 35%. The annual exclusion for tax-free gifts also
remains at $13,000 per donor, per recipient.
Unemployment insurance extension
Federal extended unemployment insurance (providing benefits for up to 99 weeks in
states with high unemployment) has been extended through the end of 2011.
Employee Social Security tax reduction
Employees will continue to enjoy a 2% cut in their share of Social Security taxes.
Most people will see this cut as an automatic adjustment to their withholding. This
cut will expire at the end of 2011.
Capital assets deduction for businesses
Congress has continued the trend of increasing first-year tax deductions to encourage
businesses to invest in capital assets. The “Section 179 Deduction” has been increased
to an annual amount of up to $500,000 for the cost of qualifying property first
used in the business during tax years beginning in 2010 or 2011.
Many tax provisions are being extended through 2011 and 2012. Work with your tax
professional and financial advisor to be sure you are educated.
