The American Taxpayer Relief Act of 2012 – What does it really mean

So Congress again waited until the last minute to “save us” from going over the fiscal cliff.  That is what we are lead to believe anyway.  Most of us simply want to know what it means to our bottom line.  So here is the short and sweet version:  Most of the tax rates and tax breaks stayed the same at least through 2013, in fact the tax rates were made permanent.  There was an increase to the top tax rate from 33% to 39.6% for those over $400K (Single) or $450K (Married).  For businesses many of the hiring credits were extended and the accelerated depreciation limits were extended through 2013 and even made retroative to 2012.  That one leaves me baffled, since the purpose of the accelerated deprecation is to encourage spending, a retroactive tax break is supposed to encourage spending in a year that is already over, a great illustration of our Congress at its best.  There are many more details which are available on the CCH publication linked below.  Please contact us if you have any questions about how this new tax act will effect your personal or business taxes.