Congress passed the fiscal cliff tax deal – known as the American Taxpayer Relief Act – in the early morning hours of Jan. 1, 2013 and President Obama is expected to sign the new legislation upon his return from holiday vacation.
According to the Tax Policy Center, less than five percent of families making under $500,000 will pay more in taxes. Households making between $500,000 and $1 million are estimated to pay an additional $6,700 in taxes and those making more than $1 million are estimated to pay an additional $123,000 in taxes.
The estate tax exemption remained the same as the past two years — $5 million per person, indexed for inflation – but the tax rate changed from 35 percent to 40 percent on anything over that amount. The gift tax exemption also remains at $5 million per person, and portability was made permanent under the new legislation.
The top marginal tax rate will go from 35 percent to 39.6 percent on individuals with income over $400,000 and married couples with income over $450,000.
Where most of us will take a hit is the rise in payroll taxes, which go from 4.2 percent to 6.2 percent in 2013 on all earned income up to $113,700.
The Flanigan Law Group provides Southern California residents with personal attention for estate planning, administration and litigation legal services. When disputes between families, arise, they are very successful in resolving legal estate issues quickly and efficiently while preserving financial and emotional resources. Contact the Flanigan Law Group at 949-450-0042.