Tax Cut Bill: A Guide to the Extensions, Cuts and Credits

[Lasher]

Reductions in Individual Income Tax Rates:

* Lower tax rates for taxpayers regardless of income.

* 10% Tax Bracket - Extends through 2012 the 10% individual tax bracket, the lowest tax rate for those individuals making up to $8,500 and married couples making up to $17,000. If the tax cut extension is not approved the 10% tax rate increases to 15%.

* 25%, 28%, 33% and 35% Tax Bracket - Extends through 2012 the current tax brackets that are set to expire at the end of 2010. The top tax rate 35% applies to those individuals making over $379,150 annually. If the tax cut extension is not approved the 35% tax rate would increase to 39.6%.

* Temporarily Repeals Itemized Deduction Limitation - extends repeal of itemized deduction limitation for two years for high income earners.

Payroll Tax Holiday:

* Through 2011, employees who pay 6.2 percent Social Security tax on wages earned up to $106,800 will get a temporary payroll tax holiday of two percentage points decreasing their contribution to 4.2 percent on wages earned. Self-employed individuals will receive a reduction in payroll self-employment tax from 12.4 percent to 10:4 percent.

Capital Gains and Dividends:

* Temporarily extends the capital gains and dividends rates - extends current capital gains and dividend rates for all taxpayers for two years through 2012 resulting in lower taxes. Current rates are zero percent for those taxpayers below the 25% tax bracket and 15% for those taxpayers 25% tax bracket and above. If the tax provisions expire the capital gains tax rates become 10% and 20% respectively. Dividends will be taxed at ordinary income tax rates.

Estate Tax

* Lowers the estate tax for two years - the proposal allows estates of $5 million per person and $10 million per couple to pass to heirs tax free through 2012. Amounts over $5 million and $10 million would be taxed at the 35% tax rate.

Marriage Penalty Relief

* Temporarily extends the expiring increase in the standard deduction for married couples.

* Temporary Extension of Unemployment Benefits:

* Allows for one year extension of federal unemployment insurance benefits and emergency unemployment compensation benefits.

http://www.cbsnews.com/8301-503544_162-20025888-503544.html

[Angry Dragon]

1. Thank You

[Lasher]

2. OK

One of the most important provisions, and perhaps the least discussed, is the capital gain/dividend tax cut. This is the reason Warren Buffett pays a lower tax rate than his secretary, according to him. During the campaign Obama promised to raise this tax from 15% to 20% for households with income over $250K.

http://www.politifact.com/truth-o-meter/promises/promise/1/increase-the-capital-gains-and-dividends-taxes-for/