As shown by the following table, business owners will face a new tax world on January 1, 2013:
|
Tax Rate on |
Tax Rate on |
|
| Top Individual Income Tax Rate |
35% |
39.6% |
| Additional Medicare Tax on Wages |
N/A |
.9% |
| Medicare Contribution Tax on Investments |
N/A |
3.8% |
| Maximum Rate on Long-Term Capital Gains |
15%* |
20% |
| Maximum Rate on Qualified Dividends |
15%* |
39.6% |
| Top Marginal Rate on Long-Term Capital Gains |
15%* |
23.8% (20% + 3.8%) |
| Highest Marginal Rate on Wages |
35% |
40.5% (39.6% + .9%) |
| Top Marginal Rate on Qualified Dividends |
15%* |
43.4% (39.6% + 3.8%) |
| * 0% for Persons with Marginal Tax Rate < 25% |
There is a common consensus that Congress may in fact take action before year-end, such as by extending certain tax legislation that is expiring, for another year. However, “given the certainty in tax rates through December 31, 2012, and the uncertainty in tax rates thereafter, businesses should consider taking action by year-end to strategize to reduce their tax bill.
For assistance with this or other tax or accounting matters please contact us at 201-947-8081 or 646-688-2807, or email us at iinfo@ourcpas.com.