The Fiscal Cliff stole the New Year’s spotlight from the Time’s Square ball. Even with over a year of foresight to deal with a large portion of the January 1 Fiscal Cliff issues, the U.S. Senate continued to prove the S&P was correct when downgrading the U.S. credit rating mainly due to political incompetence: at the absolute last second, the senators finally struck a deal and passed a bill 89-8.
As we await a slow-motion reaction from the House of Representatives, here’s your Cheat Sheet to the deal as it was blessed by the Senate:
Income Taxes: The Bush Tax Cuts will remain in tact for single persons making up to $400,000 per year and married couples making $450,000. Tax returns greater than these amounts will see rates rise from 35 percent to 39.6 percent.
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Capital Gains Taxes: Capital gains taxes will rise from 15 percent to 20 percent for single persons making up to $400,000 per year and married couples making $450,000.
Unemployment Benefits: Jobless benefits for the long-term unemployed are extended for one year.
Tax Credits: These tax credits will receive a 5-year extension: the child tax credit, the earned income tax credit, and (up-to-$2,500) tax credit for college tuition.
Spending Cuts: $109 billion in cuts to the Defense budget and other government agencies will be delayed two months.
Estate Taxes: The top tax rate for estates will rise from 35 precent to 40 percent. The first $5 million is exempted for individual estates, $10 million for family estates.
Payroll Tax Cut: Is left to expire. This will restore the payroll tax to 6.2 percent.
Check back often for updates to the dynamic Fiscal Cliff situation.