There are several tax provisions expiring on 12/31/2012 that were established under the Bush Administration unless Congress steps up and extends the provisions. However, here are four of the expiring tax provision that affect millions of taxpayers.
1. Payroll Tax
The 2% employee social security payroll for tax cut is expected to expire on 12/31/2012. The employee social security tax rate will go from 4.2% back to 6.2%. This tax provision will affect everyone who works. Both the Democrats and Republicans are expected to allow the provision to expire due to the social security deficits.
2. Individual Tax Rates
The tax rates established under President Bush are suppose to expire this year. The current six tax rates under will revert back to the five tax rates established under President Clinton. The increase in tax rates will affect everyone. The Bush and Clinton tax rates are:
3. Capital Gain Tax Rates
The capital gain tax rates established under President Bush will revert back to the capital gain tax rates established under President Clinton. The current tax rates under the Bush administration are 0% and 15%. The 2013 capital gain rates will go to 10% and 28%. Under the current tax rates, the taxpayers in the 10% and 15% tax brackets currently do not pay the capital gain tax. However, if the capital tax rates are allowed to expire then these taxpayers will be taxed at a capital gain rate of 10%.
4. Child Tax Credit
The current child tax credit established under the Bush administration is $1,000. This tax credit if allowed to expire go back down to $500 which was the credit under the Clinton administration.
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