On December 6th, President Obama announced that a tentative agreement has been reached with Republican leaders to extend the 2001 and 2003 tax cuts for two years. Although many terms of this agreement still must be clarified and debated with Democrats in Congress, this agreement may provide the framework for legislation that will be enacted soon. Key provisions of the proposed agreement include the following:
- A two year extension of the 2001 and 2003 tax cuts for all taxpayers, including the 15 percent top tax rate for long term capital gains and qualified dividends
- A two year estate tax relief, including a $5 million personal exemption and a 35% top marginal tax rate on estates exceeding this amount
- A two percentage point reduction in payroll taxes (from 6.2 percent to 4.2 percent) for employees for one year
- 100 percent business expensing of capital investments made in 2011
- A two year extension of several expiring tax provisions, such as the Child Tax Credit, the American Opportunity Tax Credit, the Earned Income Tax Credit, and the Research Tax Credit
- 2010 and 2011 Alternative Minimum Tax patches
- An extension of unemployment benefits
At this point, the Agreement does not appear to include the following provisions:
- Repeal of the recently expanded Form 1099 reporting requirements, although President Obama has previously indicated that he supports this repeal
- Enactment of Carried Interest provisions
Source: Plante Moran
