A Deal is Struck on Tax Package
President Obama and the Republicans struck a deal yesterday on a extension of the Bush tax cuts for another two years along with many other “goodies”. If enacted, the deal will provide the following:
- Extension of the top tax rate of 35% for 2011 and 2012.
- Top capital gains and dividends tax rate of 15% for 2011 and 2012.
- A 13 month extension of unemployment benefits.
- An estate tax with a top rate of 35%. The first $5 million would be exempt for estate taxes. This is also for 2011 and 2012.
- A reduction in the employee portion of social security taxes from 6.2% to 4.2% for 2011. For those in the highest wage base, this would save them about $2,100 for 2011.
- Bonus depreciation of 100% for equipment investments in 2011.
- An extension for two years of many current tax benefits that were scheduled to expire such as the research and development tax credit.
- An extension of the AMT patch for 2010 and 2011 to prevent more than 20 million taxpayers from having to pay the alternative minimum tax.
As indicated, this is a tentative deal. Congressional Democrats are not very happy with the President right now on this deal and the final law may have several changes. Based on the current deal as structured, there are many welcomed provisions that might save farmers and their families thousands if not millions in taxes for 2011 and 2012.
We will keep you updated as the deal progresses.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
More on the tax deal…
There’s been a lot more commentary emerging on the deal to extend Bush-era tax rates than details on the deal……