The Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010 has been passed by Congress and is set to be signed by President Obama later today.
(Could they come up with longer titles for these laws?)
This legislation not only extends previous Bush tax-cut provisions, but includes some additional measures. Here are the highlights:
On federal income taxes:
- Most of the current federal income tax bracket rates were scheduled to increase in 2011, but are now extended for two years until the end of 2012.
- The current capital gains and qualified dividend rates have also been extended through the end of 2012. The top rate for long-term capital gains was to have gone from 15% to 20% and the current 15% rate on qualified dividends would have disappeared all together, making such income subject to the higher ordinary income rates.
- The Alternative Minimum Tax (AMT) exemption will remain at a higher levels for two more years, but there is still no long-term fix on this matter.
On payroll taxes (FICA or Social Security):
- Workers will get a new lower payroll tax for one year as wages up to $106,800 will be subject to a 4.2% tax rather than the regular 6.2% in 2011.
On federal estate taxes:
- The federal estate tax was to be reinstated in 2011 at 55% with only a $1 million exemption. The new provision has the top tax rate at 35% with an exemption amount of $5 million per person and $10 million per married couple.
An additional provision, but not a tax cut:
- Unemployment benefits have been extended for another 13 months.
These are just a few of the provisions included in the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010. If you would like more information on the new tax bill, please visit CNNMoney.com and read Tax Cut Deal: How it Affects You .