American Taxpayer Relief Act of 2012

Jan 2, 2013

The American Taxpayer Relief Act of 2012 was passed by the Congress on January 1, 2013. The Act permanently extends a number of tax provisions that had already expired at the end of 2011 and 2012, revises tax rates on income for married couples filing jointly at $450,000 and single $400,000 of taxable income, modifies the estate tax, and extends unemployment benefits, Medicare payments and farm subsidies.

The Act has the following provisions:

  • Permanently extends employer-provided education assistance (Section 127 of the Internal Revenue Code), which allows an employee to exclude from income up to $5,250 per year in educational assistance at the undergraduate and graduate level regardless of whether the education is job-related.
  • Permanently extends the increase in the monthly exclusion for employer-provided transit and vanpool benefits.
  • Extends federal emergency unemployment benefits for one year.
  • Reinstates and extends the Work Opportunity Tax Credit through 2013.
  • Creation of marginal income and capital gains tax rates increasing relative to their 2012 levels for those with annual income over $400,000 for individuals and $450,000 for couples, Increasess the income rate from 35% to 39.6%, and capital gains rate would increase from 15% to 20%.
  • Reinstates previously phased-out tax deductions and credits for incomes over $250,000 for individuals and $300,000 for couples.
  • Changes the alternative minimum tax to permanently index it to inflation.
  • Extends a number of corporate tax breaks and loopholes , including the "active financing" tax exemption for major corporations, a rum tax supporting Puerto Rico rum industry, a tax benefit for NASCAR racetrack owners, tax credits for two- and three-wheeled electric vehicles and hiring of individuals who are members of a Native American tribe.
  • The legislation does not include an extension of the 2 percent payroll tax cut of the Social Security (FICA) employee tax.

Click here for the full text of the legislation.

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