As you may know, late Tuesday night, our government leaders approved a bill to avert the dreaded fiscal cliff, avoiding widespread tax increases and deep spending cuts.
Here are some of the specifics of the plan:
The tax rate for individuals making more than $400,000 and couples making more than $450,000 will rise from the current 35 percent to 39.6 percent.
Itemized deductions will be capped for individuals making $250,000 and for married couples making $300,000.
Taxes on inherited estates will go up to 40 percent from 35 percent.
Unemployment insurance will be extended for one year for two million people.
The alternative minimum tax will be permanently adjusted for inflation.
Child care, tuition, and research and development tax credits will be renewed.
Reimbursements for doctors who take Medicare patients will continue, but it will not be paid out of the Obama administration’s health care law.
Though a deal was reached, there are two issues that will need to be addressed come late February: the $16.4 trillion debt ceiling and cuts in federal spending for most government agencies and programs.
As always, we plan to keep you up to date on the latest financial news, what affects it may have, and the strategies we recommend for your financial plan in light of these developments.
Please feel free to contact us to discuss this or any other questions you may have.