Top 8 Highlights of the 2010 Tax Compromise That Will Save You Money
On Friday, December 17, 2010, President Obama signed into law, the much talked about, tax compromise and extension of the President Bush tax cuts. Included in the bill were some additional benefits to taxpayers and employees. Here are eight highlights from the recently passed tax bill:
- The tax rates for all individuals and all income groups, including the top 2% of earners has been extended for an additional two years.
- The capital gains and dividends tax rate remains unchanged at a top rate of 15%.
- A $2,500 college tax credit has been extended for two years.
- A $1,000 child tax credit has been extended for two years.
- The estate tax will be set at 35%, with a $5 million dollar individual exemption.
- Long-term unemployment insurance benefits will be extended for 13 months. Individuals can receive the unemployment benefits for up to 99 weeks.
- Employees will see a 2% reduction of Social Security withholdings. For employees the Social Security withholding amount will decrease from 6.2% to 4.2%. Employers do not receive a corresponding reduction in SS withholding amounts.
- The Alternative Minimum tax, which was originally set up to make sure the wealthy pay some income taxes, will be indexed to inflation. This had not been done previously and on a year to year basis, temporary adjustments had to be made. Indexing this to inflation, will prevent some 20 million middle-class taxpayers from having to pay the AMT. A group that the tax was never intended to target.