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.<\/p>\n
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.<\/p>\n