GET READY FOR SOME TAX CHANGES WHETHER CONGRESS ACTS OR NOT!
A do-nothing Congress will actually have a great impact. Unless both houses act by the end of the year, all of the Bush-era tax cuts and interim lower rates on estate taxes will automatically expire. Here’s what might happen if Congress is deadlocked:
* On January 1, 2013, the top marginal federal income tax rate will rise more than 13 percent – from 35 percent to 39.6 percent.
* The top tax rate on long-term capital gains will go from 15 percent to 20 percent – a 33 percent increase.
* The maximum tax rate on dividend income, now capped at 15 percent, will rise to 39.6 percent – a 164 percent hike. That means dividends will be taxed like ordinary income.
* The marriage penalty would return in 2013. The standard deduction for married taxpayers would no longer be calculated as 200 percent of the amount for unmarried filers; it would return to about 167 percent of the unmarried rate.
* The estate-tax exemption is scheduled to fall from $5 million back to $1 million, while the maximum estate-tax rate is scheduled to rise to 55 percent
What the State of the Union means for your wallet | Reuters
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