New US Tax Rates
The US House has, at the last minute, passed a bill to avert the Fiscal Cliff coming into full effect. Below is a summary of the main points of the bill:
Income tax rates
The bill extends the decade-old tax cuts on incomes up to $400,000 for individuals and $450,000 for married couples. Earnings above these thresholds would be taxed at a rate of 39.6% (up from 35%).
The caps still continue on itemised deductions and the phase-out of personal exemptions of individuals earning more than $250,000 and married couples earning more than $300,000.
Inherited Estates would be taxed at a top rate of 40% with the first $5.12mm in value exempted for individual estates and $10mm for family estates.
Capital Gains & Dividends
Tax on capital gains and dividend income where total compensation exceeds $400,000 for individuals and $450,000 for families would increase from 15% to 20%.
Alternative Minimum Tax
Permanently addresses the alternative minimum tax and indexes it for inflation to prevent nearly 30 million middle and upper-middle income tax payers from being hit with higher tax bills averaging almost $3,000. The tax was originally designed to ensure that some did not avoid owing tax by using loopholes.
Across the board cuts
Congress delayed for two months the $109 billion worth of across the board spending cuts set to start striking the domestic agencies this week. This and the debt ceiling will be the next areas of focus for the media agencies over the next few months.
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