2013 Tax Changes
- Thursday, 01 January 1970 00:00
Although some people say that Ben Bernanke coined the term âfiscal cliffâ and some say that it was Timothy Geithner, and even others say it came about in 1954; we can probably all agree that we would be happy to never hear it again! Well, we have gone over the cliff and this being the second time I have rewritten this; at this time here are the tax changes in store for 2013:
- Individual tax rates â individual tax rates are increased for 2013 but the 39.6% tax rate applies to those taxpayers with income over $450,000 (MFJ)
- AMT â the Alternative Minimum Tax will have a permanent âpatchâ for inflation adjustment and for 2013 the exemption amount is projected to be $80,750.
- FICA and Medicare Tax â the FICA withholding tax rate goes back up to 6.2% for 2013 and the salary limit has increased to $113,700. The medicare withholding tax rate has been increased to 2.35% for 2013
- Medical and Dental Expense Deduction â the 7.5% AGI limit will increase to 10% except for taxpayers ages 65 or older.
- Child Tax Credit â the child tax credit will remain at $1,000 per child. This is a permanent credit.
- Dependent Care Credit â the dependent care credit will remain at maximum $3,000 per child.
- Capital Gains â Capital Gains rates will not change as expected but remain at 0-15% except for those taxpayers whose income exceeds $450,000 (MFJ).
- Bonus Depreciation â this was due to go away for 2013 but the 50% bonus depreciation for first time use has been extended for another year.
- Section 179 depreciation â this was due to change drastically for 2013, but as of January 4, it will remain $500,000 dollar limit and a 2 million investment limit for new and used expenditures.
- Federal Estate Exclusion â the federal estate exclusion was scheduled to revert to $1 million with a tax rate of 55%; it will remain at $5 million with a tax rate of 40%.
These are the main tax changes for 2013. There could, of course, be other changes still coming. Stay tuned.