The Aftermath of the 2010 Tax Battle
Wednesday, January 05, 2011
FEDERAL TAXES
Individual Tax Rates/Capital Gains – For 2011 and 2012, the top tax rate stays at 35%, while the rate for capital gains and qualified dividends remains at 15%. Holding these rates steady probably avoided a huge sell-off to end 2010.
Payroll Tax Reduction – The Federal Act reduces the employee rate on Social Security contributions from 6.2% to 4.2%. Now, some of you may be saying, “Hey, doesn’t that mean that there’s even less money being paid into a Social Security benefit that is already woefully underfunded?” Don’t worry! Congress has declared that the ‘General Fund’ will reimburse Social Security for any shortfall. What deficit??
Estate Tax – If you’re reading this, then there’s a good chance that you didn’t die in 2010. That’s probably for the best, as the Federal Tax Act of 2010 retroactively reinstates the estate tax, only allowing for different elections. If you are handling an estate for a decedent that passed away in 2010 and subject to estate tax, you should be consulting an attorney and/or financial planner to figure out how to proceed going forward.
RHODE ISLAND INCOME TAX
Tax Brackets – Gone are the five tax brackets ranging from 3.75% to 9.9%. For 2011, we’ll have three brackets, with the highest tax rate at 5.99% for income over $125,000. Itemized deductions have been eliminated and the standard deduction and exemptions are eliminated for those earning $195,000.
Credits – While many of the credits have been eliminated, one that still remains is the “motion picture productions” tax credit. Maybe we’re hoping someone films “Jersey Shore: The Movie” here to revitalize the economy?
Related Articles
- Is Your Company Using Automatic 401(k) Enrollment?
- Should you still have a 401k Plan?
- The ABC’s of ETF’s
- 5 Financial Tips for the end of 2010
- A Healthy Option for Small Businesses in 2011
Follow us on Pinterest Google + Facebook Twitter See It Read It