· Income Tax Rates – Taxpayers at every income level continue with the same rates in existence during 2010 for 2011 and 2012. The top marginal rate remains at 35%.
· Itemized Deductions – The personal exemption phase-out and itemized deductions limitation provisions for higher income individuals is repealed for 2011 and 2012.
· Capital Gains and Dividend Rates – Lower capital gains and dividend rates are extended for two years. The lower rates are: taxpayers below 25% bracket: 0%, taxpayers above 25% bracket 15%.
· Social Security Tax Cut of 2% – All taxpayers, including self-employed individuals, have a one year reduction in the “social security payroll tax” of 2% in 2011. For individuals, the employee rate is reduced from 6.2% to 4.2%. The employer tax rate remains at 6.2%. For self-employed individuals, the rate is reduced from 12.4% to 10.4%.
· Marriage Penalty Relief – The Act extends for two years the increase in the basic standard deduction for a married couple filing a joint tax return to twice the basic standard deduction for an individual filing a single tax return.
· Alternative Minimum Tax – The AMT exemption amounts are increase to 2010 and 2011, thus sparing over 20 million households from tax increases.
· Education Incentives – The Act extends for two years the following tax provisions relating to education
o Coverdell Education Savings Account
o Section 127 exclusion from income for employer-provided education assistance
o Student loan interest deduction
o American Opportunity tax credit for college tuition
· Other Provisions – The Act extends the following provisions for two years
o Child tax credit
o Dependent care tax credit
o Adoption tax credit
o Employer-provided child care credit
o Earned income credit
· IRA Charitable Rollover – Allows individuals who are at least 70 ½ to transfer up to $100,000 per year directly to a qualified public charity without being treated as a taxable withdrawal from the IRA. The transfer can be counted toward the required minimum distribution.
· Deduction for State and Local Sales Tax – The federal deduction for state and local sales taxes is extended for 2010 and 2011.
· Estate and Gift Provisions – The Act generally reinstates the estate and generation-skipping transfer taxes. For 2011 and 2012, the estate tax exclusion amount is $5 million per person. The maximum estate tax rate is 35%, through 2012. For gifts made after 2010, the gift tax is reunified with the estate tax (with an exclusion of $5 million and a maximum rate of 35%).