Summary of 2010 Tax Relief Act

Last week Congress enacted the 2010 Tax Relief Act. The two-year tax measure is expected to affect virtually every American — poor and rich, old and young, married or single, with children or living alone, and even those who die, reported the New York Times.  

In addition, to extending all the Bush-era tax reductions, it sets new estate tax guidelines and reduces payroll taxes for one-year. The bill also extends unemployment benefits for the long-term unemployed for 13 more months. The bill contains number other tax breaks for individuals and businesses. The key provisions include: 
  • Continuation of the Bush tax cuts for two more years for individuals at all income levels, including reduced rates for long-term capital gains and qualified dividends. 
  • Estate and gift tax rate of 35% and a $5,000,000 exemption for two years.
  • Employees' portion of Social Security taxes reduced by 2 percentage points for 2011.
  • 100% bonus depreciation (write-off) for property placed in service by the end of 2011.
  • Two year AMT patch.
  • $1,000 Child Tax credit.

IBA West members may click HERE to view a ten-page summary of the legislation prepared by the accounting firm CCH.