Fiscal Cliff…… Higher taxes for the wealthy with a Farm Bill mixed in?

Fiscal Cliff…… Higher taxes for the wealthy with a Farm Bill mixed in?

A last minute deal struck by the 112th Congress raised taxes on some of the highest earning Americans and also extended the 2008 Farm Bill for another year. The American Tax payer Relief Act, H.R. 8, made permanent the 2001 and 2003 tax cuts for individuals making $400,000 and under and families with incomes of $450,000 and under.  A few other notable changes are listed below.  

  • Permanent patch to the Alternative Minimum Tax (AMT) that would have affected millions of Americans

  • Dividends and Capital Gains will be taxed at 20% for individuals making $400,000 and 450,000 for families

  • Estate Tax will have a $10 million dollar exemption per a couple with additional inheritance taxed at 40%

  • Unemployment Benefits for the long-term unemployed will be extended through the end of 2013

  • Business Tax Credits; select business tax credits will be extended through the end of 2013, click here to see the list.  The Agricultural Chemical Security Credit was not extended through 2013.

  • Legislation did nothing to prevent the temporary reduction in Social Security Payroll tax from expiring, the 2% point rate increase worth roughly $1,000 to someone making $50,000

The extension of the Farm Bill nearly mirrored the 2008 legislation with the exception of a few changes within the commodity title and the removal of the tax title. Additionally, the bill also authorized at least $160 million dollars in supplemental agriculture disaster relief under the Federal Crop Insurance Act.  H.R. 8 also dodged the dairy cliff by keeping dairy policy unchanged while at the same time authorizing direct payments for another year at a slightly lower trigger percentage. Both chambers are set to mark-up new Farm Bill legislation in February, ARA will keep you posted as that issue progresses.

For the list of Tax Extenders, click here.

For a brief content list of H.R.8, click here.

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