What are the most significant tax changes this year?

The most significant tax changes focus on ordinary/ earned income, dividends, capital gains, AMT tax and various exemptions and deductions. See table below.

 

Table:   Overview of tax changes
Item 2011 2012 2013
Alternative   Minimum Tax exemption $48,450 Single filers   $74,450 Married filing jointly $33,750 Single

$45,000 Married

To be determined
Tax   rate ranges- ordinary income 10%-35% 10%-35% 15%-39.6%
Long-term   capital gains tax rate (top rate) 15% 15% 20%
Qualified   dividends tax rate (top rate) 15% 15% 39.6%
Payroll   tax reduction of two percentage points Yes Final Year Expired
Surtax   of 3.8% on investment income No surtax No surtax Surtax applies to   single taxpayers with modified AGI of more than $200,000; more than $250,000   for joint filers
Increase   in Medicare hospital insurance tax wage base for self-employed N/A N/A 0.9% increase in   employee portion of high income wage base of single filers with wages of more   than $200,000; more than $250,000 for joint filers
Phase-out   of personal exemptions and itemized deductions for high income earners N/A Final year of   suspended phase-out of personal exemptions and itemized deductions Reinstatement of   phase-out of personal exemptions and itemized deductions
Marriage   penalty equalization Expanded deduction for   married joint filers Expanded deduction for   married joint filers Expanded deduction   expires
Child   credit $1,000 per child under   age 17 $1,000 per child under   age 17 $500 per child under   age 17
Child   care deduction $3,000 limit $3,000 limit $2,400 limit
Estate   tax top rate 35% 35% 55%
Estate   tax exemption $5 million $5.12 million $1 million