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The House and Senate passed the bill Tuesday and sent it to President Barack Obama for his signature.
Highlights include:
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Income tax rates: Extends decade-old tax cuts on incomes up to $400,000 for individuals, $450,000 for couples. Earnings above those amounts would be taxed at a rate of 39.6 percent, up from the current 35 percent. Extends Clinton-era caps on itemized deductions and the phase-out of the personal exemption for individuals making more than $250,000 and couples earning more than $300,000.
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Estate tax: Estates would be taxed at a top rate of 40 percent, with the first $5 million in value exempted for individual estates and $10 million for family estates. In 2012, such estates were subject to a top rate of 35 percent.
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Capital gains, dividends:
Taxes on capital gains and dividend income exceeding $400,000 for individuals and $450,000 for families would increase from 15 percent to 20 percent.
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Alternative minimum tax:
Permanently addresses the alternative minimum tax and indexes it for inflation to prevent nearly 30 million middle- and upper-middle-income taxpayers from being hit with higher tax bills averaging almost $3,000. The tax was originally designed to ensure that the wealthy did not avoid owing taxes by using loopholes.
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Other tax changes: Extends for five years
Obama-sought expansions of the child tax credit, the earned income tax
credit and an up-to-$2,500 tax credit for college tuition. Also extends for
one year accelerated "bonus" depreciation of business investments in new
property and equipment, a tax credit for research and development costs, and
a tax credit for renewable energy such as wind-generated electricity.
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Unemployment benefits:
Extends jobless benefits for the long-term unemployed for one year.
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Cuts in Medicare reimbursements to doctors:
Blocks a 27 percent cut in Medicare payments to doctors for one year. The cut is the product of an obsolete 1997 budget formula.
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Social Security payroll tax cut:
Allows a 2-percentage-point cut in the payroll tax first enacted two years ago to lapse, which restores the payroll tax to 6.2 percent.
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Across-the-board cuts: Delays for two months $109 billion worth of across-the-board spending cuts set to start striking the Pentagon and domestic agencies this week. Cost of $24 billion is divided between spending cuts and new revenues from rule changes on converting traditional individual retirement accounts into Roth IRAs.
[Associated
Press]
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