Tax Deal Reached?
Monday, July 12, 2010
Here are the highlights:
Continuation of 2001 and 2003 Income-Tax Rates
& AMT.
All of the 2001 and 2003 tax rates are extended for two
years. This means Americans will not see a tax increase
on January 1. Also, there is an AMT patch to ensure
that an additional 21 million households will not be hit with a
stealth tax increase.
Continuation of Unemployment
Insurance.
The framework will add 13 months of unemployment
benefits. Americans will be eligible for 99 weeks of
total unemployment benefits, just like today.
Elimination of the Make Work Pay Credit and
Creation of a Payroll Tax Holiday.
Under the framework, the President's Make Work Pay credit
is allowed to expire, but in its place a 1-year payroll tax
holiday is implemented. Workers pay a 6.2 percent payroll tax
that is matched by a 6.2 percent tax paid by employers for a total
12.4 percent tax. This provision will reduce the employee
share by 2 percentage points - down to 4.2 percent.
Help for Businesses.
There is a new provision that allows businesses to expense 100%
of property put in service next year and 50% bonus depreciation for
2012. Also included will be a package of tax extenders that
continue expired and expiring provisions important to both
businesses (like the tax credit for research and development) and
individuals (such as the deduction for state and local sales
taxes).
Estate Tax
Relief.
The framework includes, for the next two years, a new 35
percent estate tax for estates over $5 million ($10 million
for couples). Rates were scheduled to go back to 55
percent for estates over $1 million.
Other Relief.
The framework also includes a child tax credit, earned
income tax credit and a credit to help students with college.
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