What the New Tax Law Deal Means for You

Despite objections raised by Democrats, and a lengthy delay of the final vote until late Thursday, the House of Representatives has passed an extension of the Bush-era tax cuts, keeping payroll tax rates for all wage earners at current levels. President Barack Obama signed the bill into law Friday afternoon.

The $858 billion legislation, a product of negotiations between Obama and Republican lawmakers in the Senate, also continues a cut in Social Security taxes. That means you'll continue to bring home more in your paycheck.

The deal extends through 2012 the Bush-era reductions on income, capital gains and dividends taxes. The bill also extends unemployment insurance benefits through 2011, providing relief to thousands of jobless Americans who stopped receiving unemployment checks as of Dec. 1.

Among other ways the extension of the Bush tax cuts affects you:
  • Your tax rates will remain at their current levels -- 10%; 15%; 25%; 28%; 33%; and 35%, based on your income. It also maintains lower tax rates on your investments for the next two years.
  • If you make less than $90,000 a year, the bill provides an extension of the $2,500 credit you've been receiving to help pay for college tuition, which was begun under last year's economic stimulus bill.
  • It will be easier for you to provide for your children. Under the Bush bill, you got a child tax credit of $500. That has now increased to $1,000.
The legislation also allows businesses to completely write off any capital investment made from Sept. 9 through the end of 2011.

House Democrats bristled at the agreement Obama reached with Republicans on Dec. 6, saying it gave too much to the rich. In addition to eliminating a tax break for households making $250,000 a year or more, Democrats wanted to raise the top rate on estate taxes to 45% on inheritances of more than $3.5 million.

The Senate bill contains a provision that would exempt as much as $5 million from the inheritance tax and subject estates in excess of that amount to a 35% tax.

Procedural Objections

Whether the bill would be considered for a vote in the House on Thursday was in doubt for a while after the measure was abruptly pulled from the chamber's schedule. But a quickly implemented rules change allowed the measure to be debated and voted upon, with the final tally coming at nearly midnight.

Democratic members of the House had raised objections to the change because it would have required those who wanted to increase the rate for estate taxes to simultaneously approve the entire tax-cut measure.

Many Democrats objected, as Bloomberg News reported, because it "would not give them a clean yes or no vote on the Senate bill," said Peter Welch (D-Vt.), who opposed the legislation.

The Senate passed the measure Wednesday by an overwhelmingly margin of 81-19.

Despite the confusion caused by the rules change, which would have allowed House to amend the bill to include a higher estate tax, the legislation was largely seen as passing. Ultimately, however, not enough Democrats singed on to support the higher estate-tax proposal.

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April 09 2011 at 7:01 PM Report abuse rate up rate down Reply
chestconk

If we paid the federal government all of the Bush tax cuts for the last 9 years we could cut the deficit by more than 8 trillion dollars that would cost Dick Cheney more than $2,500,000 alone. Who knows how much George Bush would have to pay back?

December 21 2010 at 5:33 PM Report abuse +2 rate up rate down Reply
gov111w

Why don't the Liberal Progressive Democrats just really say what they want. They want all the rich people rounded up and put into camps so that they can redistribute their wealth.....there now it is out in the open !!!!

December 21 2010 at 1:54 PM Report abuse -1 rate up rate down Reply
1 reply to gov111w's comment
stiresrick

why don't the GOP just say what they really want,EVERYTHING.The GOP views the economy,like the NFL,winner takes all,like Monopoly, get all the houses,trade in for all the hotels,amass all the money,end of game.I win,You lose.Nothing personal,just business.They will not be satisfied until we have the first Trillionaire and then the first multiTrillionaire by that time one person will have all the chips.Game over.Suppose they gave an economy and no one came?

December 23 2010 at 12:21 PM Report abuse +2 rate up rate down Reply
Derrick Family

America was handed a reluctant "pass" on raising taxes. Had Democrats occupied both sides of the aisle; no doubt taxes would increase, across the board. I am convinced Washington feels it's their "duty" to increase taxes to pay for their drunken spending spree (Congressional and Senate pay raises, Pelosi's jet trips, Obama's vacations, Dodd's take, Rangle's discounted taxes, ACORN's corrupt government payments, etc...).

What disgusts me, is these that this corruption runs deeply throughout Washington from top to bottom on all sides. Rookie Congressmen/women and Senators are "schooled" in the corrupt "Washington-norm" by senior members serves only to perpetuate this greed and corruption. Lobbyists "contribute" to members campaigns in exchange for (aka purchasing) votes. Even the subjects of passed Bills (roads, bridges, stadiums, etc) take-on names of their corrupt manipulators.
Meanwhile, common Americans are jailed if committing these deeds. Ask Wesley Snipes if Charles Rangle received the same "justice" for tax evasion!

It's time Washington join the ranks of "Americans" and share the same accountability for their actions.

To the newly elected Republicans, don't give-in to Washington's "business-as-usual." America has placed our "Trust" in your representation to do the will of the MAJORITY. Doing the business mandated by the MAJORITY has never been nor ever WILL be "unpopular."

December 19 2010 at 10:54 PM Report abuse +4 rate up rate down Reply
1 reply to Derrick Family's comment
drdave415

Did you know there is a tax break for film producers in there?

December 21 2010 at 1:31 PM Report abuse rate up rate down Reply
megaruk

I guess it would be pointless to mention that the bill is illegal huh? If you read the Constitution (which no Democrat has bothered to do for several decades) ALL spending bills must originate in the House, not from a backroom deal between the President and some senators.

December 19 2010 at 9:17 PM Report abuse +3 rate up rate down Reply
1 reply to megaruk's comment
drdave415

When has illegality stopped a politician?

December 21 2010 at 1:31 PM Report abuse rate up rate down Reply
Dave Wiz

To the person in FL who said they have been on unemployment for two years due to no jobs...here's some advice....don't LIVE THERE. Do some research and MOVE! Get off your butt and do something about your situation other than waiting for Obama to fund you for another 13 months.

December 19 2010 at 11:28 AM Report abuse +4 rate up rate down Reply
4 replies to Dave Wiz's comment
Abby

This article is worded incorrectly. According to the author, "Under the Bush bill, you got a child tax credit of $500. That has now increased to $1000." This is incorrect. Under the Bush bill, the child tax credit was increased from $500 to $1000. Had Congress and President Obama not extended the Bush tax cuts, the child tax credit would decrease from $1000 to $500. The new tax deal did not increase the child tax credit, it simply prevented it from decreasing.

December 18 2010 at 2:23 PM Report abuse +6 rate up rate down Reply
2 replies to Abby's comment
Derrick Family

Good note Abby; I find it amusing that Washington (all of them) refer to passing the current bill as having passed "tax cuts." In fact, it is merely a continuation of pre-existing taxes. President Bush actually created and negotiated the tax "cuts."

It was Gore (during the Clinton Presidency) that cast the tie-breaking vote to implement taxing 85% of Social Security payments. This, like Estate Taxes is nothing less than tax double-dipping and is excessive taxation! Washington needs to learn how to "conserve" what they TAKE from working and saving responsible Americans! Downsize Washington FIRST then we'll really see how fast the debt is paid (but then again, Washington doesn't want us to see this; so tax increases might APPEAR their only solution, ya think?

December 19 2010 at 11:08 PM Report abuse +5 rate up rate down Reply
drdave415

Derrick, just cutting endless goverment pensions that last a lifetime and continue thru a politican's spouses lifetime, for a few years work might solve the problem

December 21 2010 at 1:35 PM Report abuse rate up rate down Reply
sneice002

IT means $0 to many friends and other family members or myself that have been unemployed fpr over 2YEARS . WE ARE IN florida WITH 12% UNEMPLOYMENT and there we are it is 14% . There is NO WORK here. Quick giving MONEY TO OTHER COUNTRY's and take care of us ,USA citzens only.

December 17 2010 at 11:44 PM Report abuse +1 rate up rate down Reply
1 reply to sneice002's comment
Derrick Family

I live in Florida, lost my job last November but found work outside of Florida (so now live outside Florida and even the U.S. for months at a time to meet my obligations).

Florida is a "retirement" state. The only "industry" left in this state is vacations! Having said this, the economy has devastated the vacation "industry." At the current rate, it is my belief Florida will have to add "State" taxes to meet shortfalls before it's all said and done. Inevitably this would serve to chase retirees out of Florida too...but State legislation needs to seriously start "attracting" real industry...or there will NEVER be jobs here. A bad hurricane season will prove devastating (and the Fed is stretched thin).

Senator Nelson (liberal Democrat) even let the Space Center hit the cutting block meaning another 5,000 jobs are yet to hit the unemployment numbers. Florida's representation has left years ago and we're left with mostly "politicians" who evidently are not advised/versed in economics.

December 19 2010 at 11:28 PM Report abuse +2 rate up rate down Reply
bkdodge4570

My nephew has the scars from the jet fuel fires. He got burned on his hands and feet from helping pull vicims from the rubble.

December 17 2010 at 10:06 PM Report abuse +2 rate up rate down Reply
1 reply to bkdodge4570's comment
bkdodge4570

Gives him stories to tell. Kid did a good thing that day. A lot his age would have not tried to help. But he did. Not sure what he was exposed to that day....may not have anything to do with it..... but he developed a brain tumor at the base of his skull 3 years ago. He had it removed and seems to be doing well........ but I've often wondered if the two were connected.

December 17 2010 at 10:12 PM Report abuse +2 rate up rate down Reply
bkdodge4570

Hahahaaaa.......great minds think alike psi!

December 17 2010 at 10:05 PM Report abuse +1 rate up rate down Reply