September 18, 2012

Unless Congress acts prior to year end - most of the tax rate reductions and exemptions enacted since the Economic Growth and Tax Relief Reconciliation Act of 2001 will expire. Consider the following examples of the changes that will occur at year-end if Congress takes no action.

In addition to expiring tax provisions, as a result of passage of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, the Medicare tax rate will change. For example, the Medicare tax rate on earned income exceeding $200,000 ($250,000 for couples filing a joint income tax return) will increase from 1.45% to 2.35%. In addition, net investment income will generally be subject to a 3.8% additional tax to the extent AGI exceeds $200,000 ($250,000 for couples filing a joint tax return) effective January 1, 2013. 

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