Just before midnight on Jan. 1, the U.S. House of Representatives passed H.R. 8, the American Taxpayer Relief Act of 2012, by a 257-167 vote. The U.S. Senate had passed the bill early in morning on Jan. 1 by an 89-8 vote. The president has said he will sign the bill as soon as it reaches the White House.
The bill makes permanent, starting in 2013 unless otherwise noted:
- Estate Taxes—The estate tax exemption remains $5 million per person, indexed for inflation with any unused amount allowed to transfer to a spouse (portability.) But the maximum tax rate will increase to 40 percent (up from 35 percent). The estate and gift tax exemptions are unified. Stepped-up basis is already permanent law and will continue.
- Capital Gains Taxes—The top capital gains tax rate remains 15 percent for taxpayers making under $400,000 (single person)/$450,000 (couple). The rate was increased to 20 percent for taxpayers with incomes above $400,000 (single person)/$450,000 (couple).
- Income Taxes—Income tax rate brackets will be 10 percent, 25 percent, 28 percent, and 35 percent for taxpayers making under $400,000 (single person)/$450,000 (couple). There are no caps on personal exemptions or itemized deductions. The marriage penalty is eliminated for many taxpayers.
Alternative Minimum Tax (AMT)—The bill increases the AMT exemption for 2012 to $50,600 (individuals) and $78,750 (married filing jointly) and indexes it for inflation.
The bill includes a nine-month extension of the 2008 Farm Bill that will continue programs until September 30, 2013. Major provisions include:
- An extension through Sept. 30, 2013 for most provisions of the 2008 bill;
- Does not include the new dairy gross margin/supply management program but rather extends the Milk Income Loss Contract (MILC) program and restores it to a 45 percent rate (from 35 percent) and a feed cost adjuster set at $7.35/cwt. Rather than the $9.50 level that was most recently in place. These changes scored as $110 million and were paid for via cuts to the nutrition education program;
- Authorizes $80 million for livestock indemnity payments; $400 million for the livestock forage disaster program; $50 million for emergency assistance for livestock, honey bees, and farm-raised fish; and $20 million for trees assistance. It is important to note, however, that these programs are authorized but not funded. In order to have any funding, the Appropriations Committees would have to provide funding;
- Authorizes, but as with the disaster provisions, does not fund any of the 37 expiring programs that lost their base; and
Importantly, does preserve the baseline for consideration of the farm bill this year.
Information Courtesy NCFB