To amend the Internal Revenue Code of 1986 to provide tax relief to middle-class families, small businesses, and family farms.

Summary: Middle Class and Small Business Tax Relief Act of 2012 - Makes provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) permanent for taxpayers whose adjusted gross incomes do not exceed a specified base amount (i.e., $200,000 for individual taxpayers and $250,000 for married couples filing jointly). Revises income tax rates to increase to 39.6% the maximum income tax rate for taxpayers whose incomes exceed the base amount.

Makes provisions of the Jobs and Growth Tax Relief Reconciliation Act of 2003 that reduce the tax rate on dividend and capital gains income for taxpayers whose incomes do not exceed the base amount permanent. Increases to 20% the tax rate on dividend and capital gains income for taxpayers whose incomes are  above the base amount.

Amends the Internal Revenue Code to extend for an additional year: (1) the increased Hope Scholarship tax credit (designated as the American Opportunity Tax Credit), (2) the increase in the refundable portion of the child tax credit, (3) the increased percentage of the earned income tax credit for taxpayers with three or more qualifying children, (4) the disregard of tax refunds for purposes of determining eligibility for certain means tested federal programs, (5) the increased exemption from the alternative minimum tax (AMT) for individual taxpayers, and (6) the offset against the AMT for certain nonrefundable personal tax credits.

Extends until December 31, 2013, the estate, gift, and generation-skipping transfer provisions of EGTRRA.

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``Middle Class and 
Small Business Tax Relief Act of 2012''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; etc.
Sec. 2. Permanent extension of certain 2001 tax relief for middle-class 
                            families, small businesses, and family 
                            farms.
Sec. 3. Permanent extension of 2003 tax relief for middle-class 
                            families, small businesses, and family 
                            farms.
Sec. 4. Temporary extension of 2009 tax relief.
Sec. 5. Temporary extension of estate tax relief.
Sec. 6. Temporary extension of increased alternative minimum tax 
                            exemption amount.
Sec. 7. Temporary extension of alternative minimum tax relief for 
                            nonrefundable personal credits.

SEC. 2. PERMANENT EXTENSION OF CERTAIN 2001 TAX RELIEF FOR MIDDLE-CLASS 
              FAMILIES, SMALL BUSINESSES, AND FAMILY FARMS.

    (a) In General.--Section 901 of the Economic Growth and Tax Relief 
Reconciliation Act of 2001 is amended--
            (1) by striking ``this Act shall not apply--'' and all that 
        follows through ``in the case of title V,'' in subsection (a) 
        and inserting ``title V shall not apply'', and
            (2) by striking ``years,'' in subsection (b).
    (b) Application to Certain High-Income Taxpayers.--
            (1) Income tax rates.--
                    (A) Treatment of 25- and 28-percent rate 
                brackets.--Paragraph (2) of section 1(i) is amended to 
                read as follows:
            ``(2) 25- and 28-percent rate brackets.--The tables under 
        subsections (a), (b), (c), (d), and (e) shall be applied--
                    ``(A) by substituting `25%' for `28%' each place it 
                appears (before the application of subparagraph (B)), 
                and
                    ``(B) by substituting `28%' for `31%' each place it 
                appears.''.
                    (B) 33- and 35-percent rate brackets.--Subsection 
                (i) of section 1 is amended by redesignating paragraph 
                (3) as paragraph (6) and by inserting after paragraph 
                (2) the following new paragraph:
            ``(3) Applicable amounts in the fourth rate bracket.--
                    ``(A) In general.--In the case of a taxpayer whose 
                applicable amount for the taxable year is in the fourth 
                rate bracket--
                            ``(i) the rate of tax under subsections 
                        (a), (b), (c), and (d) on a taxpayer's taxable 
                        income in the fourth rate bracket shall be 33 
                        percent to the extent such income does not 
                        exceed an amount equal to the excess of--
                                    ``(I) the applicable amount, over
                                    ``(II) the dollar amount at which 
                                such bracket begins, and
                            ``(ii) the 36 percent rate of tax under 
                        such subsections shall apply only to the 
                        taxpayer's taxable income in such bracket in 
                        excess of the amount to which clause (i) 
                        applies.
                            ``(iii) Fourth rate bracket.--For purposes 
                        of this paragraph, the term `fourth rate 
                        bracket' means the bracket which would 
                        (determined without regard to this paragraph) 
                        be the 36-percent rate bracket.
            ``(4) Applicable amounts in the highest rate bracket.--
                    ``(A) In general.--In the case of a taxpayer whose 
                applicable amount for the taxable year is in the 
                highest rate bracket--
                            ``(i) the tables under subsections (a), 
                        (b), (c), and (d) shall be applied by 
                        substituting `33%' for `36%' each place it 
                        appears,
                            ``(ii) the rate of tax under subsections 
                        (a), (b), (c), and (d) on a taxpayer's taxable 
                        income in the highest rate bracket shall be 35 
                        percent to the extent such income does not 
                        exceed an amount equal to the excess of--
                                    ``(I) the applicable amount, over
                                    ``(II) the dollar amount at which 
                                such bracket begins, and
                            ``(iii) the 39.6 percent rate of tax under 
                        such subsections shall apply only to the 
                        taxpayer's taxable income in such bracket in 
                        excess of the amount to which clause (i) 
                        applies.
                    ``(B) Highest rate bracket.--For purposes of this 
                paragraph, the term `highest rate bracket' means the 
                bracket which would (determined without regard to this 
                paragraph) be the 39.6-percent rate bracket.
            ``(5) Applicable amount.--For purposes of this subsection--
                    ``(A) In general.--The term `applicable amount' 
                means the excess of--
                            ``(i) the applicable threshold, over
                            ``(ii) the sum of the following amounts in 
                        effect for the taxable year:
                                    ``(I) the basic standard deduction 
                                (within the meaning of section 
                                63(c)(2)), and
                                    ``(II) the exemption amount (within 
                                the meaning of section 151(d)(1)) (or, 
                                in the case of subsection (a), 2 such 
                                exemption amounts).
                    ``(B) Applicable threshold.--The term `applicable 
                threshold' means, in the case of any taxpayer for any 
                taxable year, the sum of--
                            ``(i) the base amount, plus
                            ``(ii) the small business and family farm 
                        income of such taxpayer for such taxable year.
                    ``(C) Base amount.--The term `base amount' means--
                            ``(i) $250,000 in the case of subsection 
                        (a),
                            ``(ii) $200,000 in the case of subsections 
                        (b) and (c), and
                            ``(iii) \1/2\ the amount applicable under 
                        clause (i) (after adjustment, if any, under 
                        subparagraph (G)) in the case of subsection 
                        (d).
                    ``(D) Small business and family farm income.--
                            ``(i) In general.--The term `small business 
                        and family farm income' means, with respect to 
                        any taxpayer for any taxable year, the gross 
                        income of the taxpayer for such taxable year 
                        which is attributable to--
                                    ``(I) any small trade or business 
                                of the taxpayer (other than the trade 
                                or business of being an employee), or
                                    ``(II) any dividends, 
                                distributions, or interest received 
                                from any small business.
                            ``(ii) Deductions taken into account.--The 
                        amount of gross income taken into account under 
                        clause (i) shall be reduced by the amount of 
                        any deductions properly allocable thereto.
                            ``(iii) Small business.--The term `small 
                        business' means any corporation or partnership 
                        which employed an average of less than 500 
                        employees on business days during the taxable 
                        year. A trade or business shall be treated as a 
                        small trade or business if such trade or 
                        business would be a small business if such 
                        trade or business was a corporation. For 
                        purposes of this clause, all persons treated as 
                        a single employer under subsection (b), (c), 
                        (m), or (o) of section 414 shall be treated as 
                        a single entity.
                    ``(E) Inflation adjustment.--For purposes of this 
                paragraph, with respect to taxable years beginning in 
                calendar years after 2012, each of the dollar amounts 
                under clauses (i) and (ii) of subparagraph (C) shall be 
                adjusted in the same manner as under paragraph (1)(C), 
                except that subsection (f)(3)(B) shall be applied by 
                substituting `2011' for `1992'.''.
            (2) Phaseout of personal exemptions and itemized 
        deductions.--
                    (A) Overall limitation on itemized deductions.--
                Section 68 is amended--
                            (i) by striking ``the applicable amount'' 
                        the first place it appears in subsection (a) 
                        and inserting ``the applicable threshold in 
                        effect under section 1(i)(3)'',
                            (ii) by striking ``the applicable amount'' 
                        in subsection (a)(1) and inserting ``such 
                        applicable threshold'',
                            (iii) by striking subsection (b) and 
                        redesignating subsections (c), (d), and (e) as 
                        subsections (b), (c), and (d), respectively, 
                        and
                            (iv) by striking subsections (f) and (g).
                    (B) Phaseout of deductions for personal 
                exemptions.--
                            (i) In general.--Paragraph (3) of section 
                        151(d) is amended--
                                    (I) by striking ``the threshold 
                                amount'' in subparagraphs (A) and (B) 
                                and inserting ``the applicable 
                                threshold in effect under section 
                                1(i)(3)'',
                                    (II) by striking subparagraph (C) 
                                and redesignating subparagraph (D) as 
                                subparagraph (C), and
                                    (III) by striking subparagraphs (E) 
                                and (F).
                            (ii) Conforming amendments.--Paragraph (4) 
                        of section 151(d) is amended--
                                    (I) by striking subparagraph (B),
                                    (II) by redesignating clauses (i) 
                                and (ii) of subparagraph (A) as 
                                subparagraphs (A) and (B), 
                                respectively, and by indenting such 
                                subparagraphs (as so redesignated) 
                                accordingly, and
                                    (III) by striking all that precedes 
                                ``in a calendar year after 1989,'' and 
                                inserting the following:
            ``(4) Inflation adjustment.--In the case of any taxable 
        year beginning''.
    (c) Effective Date.--Except as otherwise provided, the amendments 
made by this section shall apply to taxable years beginning after 
December 31, 2012.

SEC. 3. PERMANENT EXTENSION OF 2003 TAX RELIEF FOR MIDDLE-CLASS 
              FAMILIES, SMALL BUSINESSES, AND FAMILY FARMS.

    (a) Permanent Extension.--
            (1) In general.--Section 303 of the Jobs and Growth Tax 
        Relief Reconciliation Act of 2003 is hereby repealed.
            (2) Effective date.--The repeal made by this subsection 
        shall take effect as if included in the enactment of the Jobs 
        and Growth Tax Relief Reconciliation Act of 2003.
    (b) 20-Percent Capital Gains Rate for Certain High-Income 
Individuals.--
            (1) In general.--Paragraph (1) of section 1(h) is amended 
        by striking subparagraph (C), by redesignating subparagraphs 
        (D) and (E) as subparagraphs (E) and (F) and by inserting after 
        subparagraph (B) the following new subparagraphs:
                    ``(C) 15 percent of the lesser of--
                            ``(i) so much of the adjusted net capital 
                        gain (or, if less, taxable income) as exceeds 
                        the amount on which a tax is determined under 
                        subparagraph (B), or
                            ``(ii) the excess (if any) of--
                                    ``(I) the amount of taxable income 
                                which would (without regard to this 
                                paragraph) be taxed at a rate below 36 
                                percent (39.6 percent in the case of a 
                                taxpayer whose applicable amount (as 
                                defined in subsection (i)(3)) is above 
                                the dollar amount at which the highest 
                                rate bracket (as defined in such 
                                subsection) begins), over
                                    ``(II) the sum of the amounts on 
                                which a tax is determined under 
                                subparagraphs (A) and (B),
                    ``(D) 20 percent of the adjusted net capital gain 
                (or, if less, taxable income) in excess of the sum of 
                the amounts on which tax is determined under 
                subparagraphs (B) and (C),''.
            (2) Minimum tax.--Paragraph (3) of section 55(b) is amended 
        by striking subparagraph (C), by redesignating subparagraph (D) 
        as subparagraph (E), and by inserting after subparagraph (B) 
        the following new subparagraphs:
                    ``(C) 15 percent of the lesser of--
                            ``(i) so much of the adjusted net capital 
                        gain (or, if less, taxable excess) as exceeds 
                        the amount on which tax is determined under 
                        subparagraph (B), or
                            ``(ii) the excess described in section 
                        1(h)(1)(C)(ii), plus
                    ``(D) 20 percent of the adjusted net capital gain 
                (or, if less, taxable excess) in excess of the sum of 
                the amounts on which tax is determined under 
                subparagraphs (B) and (C), plus''.
    (c) Conforming Amendments.--
            (1) The following provisions are each amended by striking 
        ``15 percent'' and inserting ``20 percent'':
                    (A) Section 531.
                    (B) Section 541.
                    (C) Section 1445(e)(1).
                    (D) The second sentence of section 7518(g)(6)(A).
                    (E) Section 53511(f)(2) of title 46, United States 
                Code.
            (2) Sections 1(h)(1)(B) and 55(b)(3)(B) are each amended by 
        striking ``5 percent (0 percent in the case of taxable years 
        beginning after 2007)'' and inserting ``0 percent''.
            (3) Section 1445(e)(6) is amended by striking ``15 percent 
        (20 percent in the case of taxable years beginning after 
        December 31, 2010)'' and inserting ``20 percent''.
    (d) Effective Dates.--
            (1) In general.--Except as otherwise provided, the 
        amendments made by subsections (b) and (c) shall apply to 
        taxable years beginning after December 31, 2012.
            (2) Withholding.--The amendments made by paragraphs (1)(C) 
        and (3) of subsection (c) shall apply to amounts paid on or 
        after January 1, 2013.

SEC. 4. TEMPORARY EXTENSION OF 2009 TAX RELIEF.

    (a) American Opportunity Tax Credit.--
            (1) In general.--Section 25A(i) is amended by striking ``or 
        2012'' and inserting ``2012, or 2013''.
            (2) Treatment of possessions.--Section 1004(c)(1) of 
        division B of the American Recovery and Reinvestment Tax Act of 
        2009 is amended by striking ``and 2012'' each place it appears 
        and inserting ``2012, and 2013''.
    (b) Child Tax Credit.--Section 24(d)(4) is amended--
            (1) by striking ``and 2012'' in the heading and inserting 
        ``2012, and 2013'', and
            (2) by striking ``or 2012'' and inserting ``2012, or 
        2013''.
    (c) Earned Income Tax Credit.--Section 32(b)(3) is amended--
            (1) by striking ``and 2012'' in the heading and inserting 
        ``2012, and 2013'', and
            (2) by striking ``or 2012'' and inserting ``2012, or 
        2013''.
    (d) Temporary Extension of Rule Disregarding Refunds in the 
Administration of Federal Programs and Federally Assisted Programs.--
Subsection (b) of section 6409 is amended by striking ``December 31, 
2012'' and inserting ``December 31, 2013''.
    (e) Effective Dates.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2012.

SEC. 5. TEMPORARY EXTENSION OF ESTATE TAX RELIEF.

    (a) In General.--Section 901 of the Economic Growth and Tax Relief 
Reconciliation Act of 2001, as amended by this Act, is amended by 
striking ``December 31, 2012'' and inserting ``December 31, 2013''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in the enactment of the Economic Growth and Tax 
Relief Reconciliation Act of 2001.

SEC. 6. TEMPORARY EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX 
              EXEMPTION AMOUNT.

    (a) In General.--Paragraph (1) of section 55(d) is amended--
            (1) by striking ``$72,450'' and all that follows through 
        ``2011'' in subparagraph (A) and inserting ``$78,750 in the 
        case of taxable years beginning in 2012'', and
            (2) by striking ``$47,450'' and all that follows through 
        ``2011'' in subparagraph (B) and inserting ``$50,600 in the 
        case of taxable years beginning in 2012''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2011.

SEC. 7. TEMPORARY EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF FOR 
              NONREFUNDABLE PERSONAL CREDITS.

    (a) In General.--Paragraph (2) of section 26(a) is amended--
            (1) by striking ``or 2011'' and inserting ``2011, or 
        2012'', and
            (2) by striking ``2011'' in the heading thereof and 
        inserting ``2012''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2011.