I was just reading what President Obama was planning for the 2011 national budget, and it appears that there could be some impact here on our taxes. From this CNN Money article, we see that some significant tax changes are part of the proposal (but nothing etched in stone till the Congress votes too):
- For high income families, the Bush tax cuts of the past could expire. If these changes push through, then individuals making $200,000 and families making $250,000 will be affected. Ouch! The top marginal tax rates will be moving up such that the 33% rate will now be 36%; what is 35% will shoot up to 39.6%. If you live in California, like I do, this could mean a hefty tax bill at the highest brackets (and don’t forget our California state tax on top of this: the highest marginal rate is 10.3%)!
- Long term capital gains taxes are pegged to rise from 15% to 20%.
- A bunch of personal exemptions could expire.
- Itemized deductions may be limited and capped. But could this hurt charitable giving?
- There may be possible changes to the estate tax so that the exemption is at $3.5 million, with the top rate on taxable assets being 45%.
- Investment fund managers may have their profits taxed.
- Capital gains taxes on small business stock may be eliminated.
- Tax cuts for lower and middle income households may be made permanent.
- No more “wealth” tax for the middle class?
- Make Work Pay, child-care, low-income and American Opportunity tax credits may be extended.
Will these make it to law? We shall see! It’ll be a tough sell to the Senate if this economy continues to struggle. Just some observations.
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