New Tax Law, Revisited.
By now you’re likely somewhat familiar
with the main highlights of the 2010 Tax Relief Act since it’s garnered so much
media attention and CRI issued a brief overview. If not, please be sure to
review CRI’s take on the Act by
clicking here.
So how will this law affect you? Mainly, through extension of
tax cuts and a revision to the estates and gifts, this tax bill may be your
personal version of a money tree in 2011.
Tax
Cuts
The biggest part of the bill, of course, is the two-year
extension of current Bush-era tax cuts. The six federal income tax rates will
remain at the same levels they are today: 10%, 15%, 25%, 28%, 33% and 35%.
The projected
tax rates for 2011 under the 2010 Tax Relief Bill are:
SINGLE INDIVIDUALS
|
If taxable income is:
|
The tax will be:
|
|
Not over $8,500
|
10% of taxable income
|
|
Over $8,500 but not over $34,500
|
$850.00 plus 15% of the excess over $8,500
|
|
Over $34,500 but not over $83,600
|
$4,750.00 plus 25% of the excess over $34,500
|
|
Over $83,600 but not over $174,400
|
$17,025.00 plus 28% of the excess over $83,600
|
|
Over $174,400 but not over $379,150
|
$42,449.00 plus 33% of the excess over $174,400
|
|
Over $379,150
|
$110,016.50 plus 35% of the excess over $379,150
|
MARRIED COUPLES FILING JOINTLY
|
If taxable income is:
|
The tax will be:
|
|
Not over $17,000
|
10% of taxable income
|
|
Over $17,000 but not over $69,000
|
$1,700.00 plus 15% of the excess over $17,000
|
|
Over $69,000 but not over $139,350
|
$9,500.00 plus 25% of the excess over $69,000
|
|
Over $139,350 but not over $212,300
|
$27,087.50 plus 28% of the excess over $139,350
|
|
Over $212,300 but not over $379,150
|
$47,513.50 plus 33% of the excess over $212,300
|
|
Over $379,150
|
$102,574.00 plus 35% of the excess over $379,150
|
Combined with a payroll tax cut, the extension of the
individual rate cuts offers many income earners the opportunity to pick a few
leaves from the money tree in 2011. For example, depending upon the individual’s
filing status, a taxpayer earning $50,000 in 2011 will see an approximate tax
savings of close to $2,000 in combined income tax and payroll tax reductions.
Estates
& Gifts
Another significant item covered in
this Tax Bill is a major revision to the taxation of estates and gifts. The
estate tax has been reinstated for 2011 but the exclusion has been raised higher
than ever before to $5 million, and the maximum tax rate is now 35%.
Additionally, the gift tax exclusion has been
reunified with the estate tax so that same $5 million applies for lifetime gifts
as well.
For more details, review the full article we have posted on
our website,
"Congress Passes Two-Year
Extension of the Bush-Era Tax Cuts." Here at CRI
we’ll be busy fertilizing that money tree by continuing to study the bill in
detail, assessing how you may best benefit from it, and sharing these insights
with you in the future.