By John Henegar
Think the sunset of the so-called "Bush Tax Cuts" only impacts the rich? Think again.
When these provisions expire at midnight December 31, 2012, not only will the top tax rate go from 35% to 39.6% but the bottom tax rate of 10% will go away, leaving the lowest tax rate at 15%.
Here are some additional tax savers that will fade away:
- Child tax credit will fall from $1,000 to $500 and its partial refundability will disappear for most families.
- Standard deduction for married couples will drop from $11,900 to $9,950.
- "Marriage Penalty" provisions will drop from 200% to 167% of a single person's tax bracket and standard deduction.
- Dependent care tax credit will drop from 35% to 30% with phase out to begin at $10,000 of income down from $15,000.
- The Earned income Tax Credit’s higher phase-out level for married taxpayers will disappear and become the same as unmarried, which will be a drop of $5,210.
- The exclusion of “up to” $5,250 of employer provided educational assistance disappears.
- The phaseouts for the $2,500 of student loan interest deductions will drop $20,000 for singles and $65,000-$80,000 for marrieds.
Click here for the full Congressional Research Service study detailing the tax provisions expiring in 2012.
For more information, contact a member of Decosimo's tax team.