Source: https://attawaylinville.com/2013/10/the-fiscal-cliff/
Timestamp: 2019-04-18 22:59:19+00:00

Document:
o Current 15% rate will increase 5% to 20%.
· Personal exemptions currently not being phased out will be reduced by 2% for each $2,500 of taxpayer’s adjusted gross income that exceeds a certain inflation adjusted threshold.
· Itemized deductions currently not being phased out will be reduced by 3% for each $2,500 of taxpayer’s adjusted gross income that exceeds a certain inflation adjusted threshold.
· Child care credit, adoption credit, and dependent care credit will be reduced.
· Education incentives will either be eliminated or reduced.
Estate Tax Increase – Estate tax exemption will decrease from its current level of $5,120,000 to $1,000,000 and the tax rate will increase from its current rate of 35% to 55%.
Alternative Minimum Tax (AMT) – Reversion of the Alternative Minimum Tax thresholds to their 2000 tax year levels.
· Unless another “patch” is passed, the AMT exemption amounts will drop for married individuals from $74,450 in 2011 to $45,000, and for unmarried from $48,450 in 2011 to $33,750. Unless Congress acts, 30 million plus taxpayers, or roughly one-fifth of all taxpayers, could be hit by AMT in 2012.
Social Security Payroll Tax Cut – Expiration of a Social Security payroll tax cut, most recently extended by the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA).
· A 2 percent reduction on the first $110,100 of compensation received in 2012 has been extended through until December 31, 2012. On January 1, 2013 the two percent reduction will be eliminated which will result in a two percent increase in taxes.
Sequestration – Automatic spending cuts sequestration to most discretionary programs and defense are required by the Budget Control Act of 2011. These cuts have not been identified.
· Congress failed to produce a deficit reduction bill with at least $1.2 trillion in cuts connected to the $1.2 trillion increase in the debt ceiling, so automatic across-the-board cuts are being triggered.
o These cuts would apply to mandatory and discretionary spending in the years 2013 to 2021 and be in an amount equal to the difference between $1.2 trillion and the amount of deficit reduction enacted from the joint committee.
§ Social Security, Medicaid, civil and military employee pay.
§ Medicare benefits would be limited to a 2% reduction (reductions would apply to Medicare providers).
Unemployment Benefits – Expiration of federal unemployment benefits, most recently extended by the Middle Class Tax Relief and Job Creation Act of 2012.
§ Increase in Medicare Payroll Tax – A .9% tax increase to employees (not employers) in the Medicare payroll taxes on all wages over $200,000 for single/$250,000 for married taxpayers. This tax is not deductible.
§ High Medical Bills Tax – Medical expense deductions on must exceed 10% of adjusted gross income before they can be deducted. In 2012, medical expenses only needed to exceed 7.5% of adjusted gross income.
§ Flexible Spending Account Cap – Flexible Spending account that is unlimited will be capped at $2,500.
§ Employer Provided Retirement Drug Coverage – The tax deduction for employer provided retirement drug coverage is being eliminated in coordination with Medicare Part D.
Debt Ceiling – The government will run out of money before 2012, requiring Congress and the President to negotiate a bill acceptable to both.
· Specialty Assets Write Down – specialty assets currently written off over 15 years, including qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property (under §168(e)) will be written off over 39 years.
· Bonus Depreciation – 100% bonus first-year depreciation allowance for qualified property under §168(k)(1) and §168(k)(5) will be eliminated.
· §179 Expense – the expense election is increased to $500,000, with a $2 million investment ceiling.
· Environmental Remediation Costs – these costs will no longer be deductible under $198(h).
· Work Opportunity Tax Credit – the WOTC for non-veterans under Code Sec. 51(c)(4) will be eliminated.
· Energy Efficient Homes Credit – credit for construction of new energy efficient homes under §45L will be eliminated.
o contributions of computers for educational purposes under § 170(e)(6)(G).
o deferral under Code Sec. 1397B of capital gains tax on sale of qualified assets sold and replaced.
· Energy efficient appliances – credit for energy efficient appliances under §45M will be eliminated.
1. List of Expiring Federal Tax Provisions 2010 – 2020, Staff of the Joint Committee on Taxation, January 21, 2011.
2. An Overview of Tax Provisions Expiring in 2012, Congressional Research Service Report R42485.

References: §168
 §168
 §168
 §179
 §45
 § 170
 §45