Unemployment Insurance Reauthorization, and Job Creation Act of 2010
There is some good news for taxpayers in this latest tax act but also some disappointments. Below are a few highlights.
Income Tax Rates
There is an extension of some of the Bush tax cuts. The top individual tax rate will remain at 35% through 2012. The 15% maximum rate (0% for filers in the 10% or 15% tax brackets) on dividends and long-term capital gains have also been extended through 2012.
Estate Taxes
There was some pull back in terms of estate taxes. Estate tax will return for 2011 and 2012 with a $5 million exemption and a 35% rate. There are two options or 2010: the taxpayer can either adopt the 2011 rules of pay no estate tax, but heirs can only get a step-up in basis for the first $1.3 million (plus $3 million for assets going to a surviving spouse).
Payroll Taxes
For 2011 only the 6.2% tax rate for the employee portion of Social Security tax will decrease to 4.2%. The employer;s portion will remain at 6.2%. This in essence replaces the Making Work Pay Credit.
Depreciation and Other Items
As mentioned in a previous tax tip the special Section 179 and bonus depreciation options for qualified and other fixed assets have been extended and enhanced. The exemption for Alternative Minimum Tax that seems to affect more and more taxpayers has been increased for 2010 and 2011.
Provisions Not Extended
The act did not extend every tax break. Some notable provision that were not extended include qualified motor vehicle tax deduction, real property tax deduction for non-itemizers, and the partial exclusion of unemployment benefits.
