Though it was a long, often contentious time coming, Congress did finally approve a bill to reduce what everyone dubbed the “fiscal cliff:” the U.S. budget deficit. Taxes will be raised for high income earners. While many individuals and families were concerned by the expected drop in estate tax exemption from $5.12 million to $1 million, the $5.12 million exemption has stayed and will continue to be graduated for inflation.
Other items of note: There was an estate tax increase, from 35 percent to 40 percent; the estate tax rate exemption is $5.12 million per individual. Also, dividends and capital gains are now taxed at 23.8 percent, the combination of a new 20 percent capital gains tax and a 3.8 percent surtax from the Affordable Care Act. However, that surtax only applies to individuals making over $200,000, and to married couples filing jointly with incomes of more than $250,000.
The income tax was increased for high-income households, for individuals who earn $400,000 annually, and for married couples who earn $450,000 annually together. Social Security had a tax increase, as well; the payroll tax cut which expired with 2012 was not extended; those taxes will rise 2 percent.
The start of 2013 and new tax rates means you should review your current estate plan with a Hook Law Center estate planning attorney to ensure your assets are protected.
The elder law attorneys and estate planning lawyers at the Hook Law Center in Virgina Beach and Suffolk, help Virginia families with trust & estate administration, guardianships, long term care planning, special needs planning, veterans benefits, and more. Learn more at http://www.hooklawcenter.com/