Basics of Fiscal Cliff Deal

  • The Bush tax cut will expire for high earners  $ 400 000/single and $450000/couples  and their rates rise to 39.6%  from 35 %.
  • The social security tax rate rises to 6.2% for employees ( first $113,700)
  • A permanent increase in taxes in capital gains and dividends to 20% but only for those in the $400 000 and $ 450 000 couple brackets.
  • Tax increases on estates over $ 5 million, from 35% to 40%.
  • Permanent indexing for alternative minimum tax.

 

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