2013 TAX RATES – WHAT WILL THEY BE?
Much has been said about the country heading towards a ‘fiscal cliff” if the United States continues down the path we are currently going. The attached chart from Withum Smith + Brown, CPA’s outlines possible outcomes for 2013, depending on which candidate wins the election, and they get everything they are asking for. The other option is what would happen if no one agrees and the automatic cuts kick in.
The one thing I can assure you of is probably none of these scenarios will be adopted. The reason for this is both parties will have to give a little no matter who wins the election. This is just a starting point that each party is negotiating from.
| 2012 RATES | 2013 RATES If No Further Legislation | OBAMA PROPOSALS | ROMNEY PROPOSALS | |
| TOP INDIVIDUAL RATES |
35% |
39.6% |
39.6% |
28% |
| REMAINING BRACKETS | 10,15,25,28,33% | 15,28,31,36% | 10,15,25,28,36% | 8,12,20,22.4,26.4% |
| TOP LTCG RATE | 15% | 23.8% (2) | 23.8% (3) | 15% (4) |
| QUALIFIED DIVIDEND RATE |
15% |
43.4% (5) |
43.4% (6,7) |
15% (8) |
| TOP RATE ON INTEREST |
35% |
43.4% (9) |
43.4% (10) |
28% (11) |
| ESTATE TAX RATE | 35% (12) | 55% ( 13) | 45% (14) | ELIMINATED |
| TOP CORPERATE TAX RATE |
35% |
35% |
28% |
25% |
| EMPLOYEE SHARE OF PAYROLL TAX |
4.2% |
6.2% |
6.2% |
6.2% |
| AMT TREATMENT |
$45,000 EXEMPTION |
$45,000 EXEMPTION |
REPLACED WITH “BUFFETT RULE” |
ELIMINATED |
All proposed rates are as of June 13, 2012 and are subject to change.
- Absent further legislation the “Bush Tax Cuts” established in 2001 and 2003 are stated to expire on January 1, 2013.
- Includes 3.8% tax to be imposed on “unearned income” beginning January 1, 2013.
- For taxpayers with AGI > $250,000 (MFJ) Top Rate remains at 15% for all other taxpayers.
- For taxpayers with AGI > $200,000 (MFJ) Tax rate reduced to 0% for taxpayers earning less than $200,000.
- Includes 3.8% tax rate to be imposed on “unearned income” beginning January 1, 2013.
- Includes 3.8% tax rate to be imposed on “unearned income” beginning January 1, 2013.
- For taxpayers with AGI > $250,000 (MFJ) Top rate remains at 15% for all other tax payers.
- For taxpayers with AGI > $200,000 (MFJ) Top rate reduced to 0% for tax payers earning less than $200,000.
- Includes 3.8 % tax to be imposed on “unearned income” beginning January 1, 2013.
- Includes 3.8 % tax to be imposed on “unearned income” beginning January 1, 2013.
- For taxpayers with AGI > $200,000 (MFJ) Top rate reduced to 0% for tax payers earning less than $200,000.
- Lifetime exemption of $5,320,000.
- Lifetime exemption of $1,000,000.
- President Obama would institute a $3,500,000 lifetime exemption.
- U.S. manufacturers would be capped at a maximum 28% RATE.
- The “Buffett Rule” is an alternate calculation for taxpayers earning in excess of $1,000,000 to ensure they pay tax at a minimum effective rate of 30%.
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