2012 Taxes Will Rise Regardless of Congressional Action
Taxes will rise at the start of the year, Regardless of whether Congress acts during the lame duck session to extend the 2001 and 2003 tax cuts.
Among these new taxes are the Affordable Care Act's 3.8 percent surtax on capital gains and dividend income and a 0.9 percent surtax on earned income for individuals earning more than $200,000 per year.
There will also be a small number of taxpayers who will be affected by the alternative minimum tax for the first time—even if Congress raises the exemption level—because of “bracket creep” that occurs as wages grow faster than the inflation-adjusted levels of the exemption. AMT, originally created as a way to prevent wealthy taxpayers from avoiding income taxes, is estimated to affect 45.3 percent of taxpayers in the $75,000-$100,000 income range in 2012 if Congress does not increase the exemption amount from $33,750 for individuals to $50,600.
The payroll tax cut's expiration will be the most noticeable tax increase for middle-income households, adding as much as $2,202 per year to tax bills.
Mon, November 5, 2012