Tax hikes or yikes – Bush tax cuts expire

Bush tax cuts are due to expire end of 2010:

Here are the key provisions:

1) Top marginal income tax rate goes from 35% to 39.6%

2) Qualified dividend tax rate goes from 15% to your income tax bracket, which can be has high as 39.6%

3) Long term capital gain tax rate goes from 15 to 20% for most taxpayers.

4) Section 179 depreciation goes from $250,000 to $25,000

5) Estate tax exemption goes back to $1MM from unlimited in 2010; $2MM in community property states, top tax rate is still 55%.  Step-up basis returns

6) Increased child tax credit (extra $2K) will expire

7) Married joint penalty comes back, income tax brackets to be reduced

8) Lower 10% bracket for taxpayers to be removed

9) Secondary school teachers lose $250 expense deduction

10) Sales tax deduction to replace state income tax deduction

11) Deduction for mortgage insurance as qualified interest

12) AGI deduction for tuition and education expenses

13) Tax free treatment for charitable distributions from IRAs

14) Amercian opportunity tax credit, the hope scholarship credit (lower) will be reinstated

15) Nonrefundable personal credits like adoption expense credit, alternative vehicle credit, child tax credit cannot be used to offset AMT

16) Alternative motor vehicle credits including hybrid, electric, clean diesel, fuel cell

17) Earned income tax credit with 3 or more children will go down 45%

18) First time homebuyer credit

19) Making work pay credit – $500

20) R&D tax credits (already expired)

21) Worker’t opportunity tax credit

22) New markets tax credit (already expired)

23) Refundable credit for AMT taxes paid in prior years for AMT preferences

24) Exemption for AMT goes back down to $33,750 Single or HOH, $45,000 MFJ, $22,500 MFS

25) Exclusion of unemployment insurance benefits of $7K from income

There are many more provisions, I tried to highlight the ones that affect the most people.