9 Bush Tax Cuts Expire Soon

Posted by Madison on May 17, 2010

Even though the health care reform bill passed, increases in taxes aren’t over yet. The old 2001 Bush Tax Cuts are set to expire at the end of 2010, leaving us all with higher taxes in 2011.

Since December 31, 2010 is the date that the Bush tax cuts expire, I’m sure there will be a lot of debate in Congress this year over all of these. Here’s what we’re looking at:

Update: The Bush tax cuts are again set to expire. For more information, see Will the Bush Tax Cuts Expire in 2012?

Tax Cuts Expiring in 2010

  1. Tax Rates. The top tax rate will go from 35% to 39.6%. In addition, if nothing is done, it will mean higher taxes across the board and a return of the marriage tax penalty. See the proposed tax rates for more information.
  2. Capital Gains. The 0% long term capital gains rate will go away. Capital gains rates will go up to 10% for lower tax brackets and from 15% to 20% for higher tax brackets.
  3. Dividends. Dividends will be taxed as ordinary income, with the new higher rates. Right now the dividend tax rates are 10% and 15%.
  4. Child Tax Credit. The child tax credit will return to $500 from the current $1,000 per child. In addition, it may not be refundable for some taxpayers.
  5. 529 Plans. 529 plan withdrawals will not be allowed tax free for computer or Internet access.
  6. Business Taxes. In addition, various business taxes will change including the payroll tax credit and section 179 expense deduction.
  7. Estate Taxes. Without any action, the estate tax (or death tax as some like to call it) exemption will go back to a $1 million exemption.
  8. Other Tax Credits. The tuition credits will be limited, as will the earned income tax credit.
  9. Mortgage Premiums. You will no longer be able to deduct mortgage insurance premiums after December 31, 2010.

No matter what happens, we’re going to have some planning to do, like determining when should you pay taxes on your 2010 Roth conversion?

Obama Tax Cuts

Will we have a new set of tax cuts in place before year end? Will President Obama extend the Bush tax cuts for 10 more years?

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