Bush-Era Tax Cuts Extended Pending Obama’s Signature
The House of Representatives must have felt the Holiday spirit and agreed to the Senate’s version of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, HR 4853. This bill postpones the scheduled sunset of the lower tax rates introduced in 2001 by the Economic Growth and Tax Relief Reconciliation Act (EGTRRA, PL 107-16); those rates will now continue through 2012. The bill also continues the lower capital gains tax rate introduced by the Jobs and Growth Tax Relief Reconciliation Act of 2003 (PL 108-27) through 2012.
It is expected that President Obama will sign the Act early next week. In addition to an extension of the lower individual income and capital gains tax rates, marriage penalty relief, and more than 50 other tax benefits popularly referred to as the “Bush Tax Cuts,” the legislation makes over 100 changes to the Internal Revenue Code.
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 also:
- Reinstates the estate and gift taxes (at higher rates and higher exclusion amounts)
- Extends the 100 percent bonus depreciation through 2011 and 50 percent bonus depreciation through 2012
- Extends the deduction for elementary and secondary school teacher expenses
- Extends the deduction for state and local general sales taxes
- Extends the deduction for qualified tuition and related expenses
- Includes an AMT “patch”
- Provides a one-year payroll tax cut
For the next two years, the new law offers taxpayers some certainty for tax planning. The new law is temporary and expires after the 2012 tax year. CCH Tax Briefing has an easy to read Special Report dated December 17, 2010 that highlights the Tax Relief/Job Creation Act of 2010. Please feel free to contact me at the Las Vegas CPA firm of Wallace Neumann & Verville LLP if you have any questions. Have a wonderful Holiday Season!