Taxpayers often struggle to pay their taxes owing to a high amount that is required for them to meet their tax payments. As such, the US government through congress passed the American Taxpayer Relief Act of 2012 on January 1, 2013, and was signed into law by President Barack Obama on Jan. 2.
The piece of legislation is a partial resolution to the United States fiscal cliff. The following is a list of major tax rate changes compared with previous years:
The top marginal tax rate amplified to 39.6% from 35% for high-income individuals and families.
The two-year old cut to payroll taxes expires in 2014, which means the social security tax returns to 6.2% from 4.2% for employee and to 12.4% from 10.4% for self-employed up to the annual maximum ($117,000 for 2014, $118,500 for 2015). Also, those make more than $200,000 for singles and $250,000 for married and filed jointly, will need to pay an additional 0.9% Medicare tax for the portion that is higher than $200,000 (single) or $250,000 (married and filed jointly).
For individuals makes more than $258,250 in 2015 ($250,000 for 2014) and couples makes more than $309,900 ($300,000 for 2014), the personal exemption was gradually eliminated.
Capital Gain Tax
The top marginal tax rate on capital gains is increased to 20% for that fall into upper income bracket of 39.6%. It will remain 15% for those makes less than that.
The estate tax is increased to 40% of the value above $5,430,000 in 2015 ($5,250,000 for 2014