President's Advisory Panel for Federal Tax Reform
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First of all, the new tax changes will give some stability in tax planning.  The 2010 Tax Relief Act extends the Bush-era individual and capital gains/dividend tax cuts for all taxpayers for 2011 and 2012. But be careful,  the provisions are temporary and the new law places the ultimate fate of the Bush-era tax cuts to 2012, a presidential year.

Here are some details:

Individual income tax rates that are presently in place will be extended for 2011 and 2012 with the maximum tax rate at 35% versus 39.6%. In addition, the amount withheld  from paychecks for social security will drop to 4.2% from the present 6.2%. This is only for the 2011 year. What that means is that an individual earning $50,000 in 2011 will see an approximate tax savings of $1,890 in combined income tax and payroll tax rate reductions. This information courtesy of   Commerce Clearing House, publisher of tax resources.

Earned Income Tax Credit
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Other individual income tax areas will stay the same. For example,  capital gains/dividends will still be taxes at 15%.  There will be relief in the itemized deduction limitation, marriage penalty , child tax credit, earned income tax credit, adoption credit, dependent care credit, mortgage insurance premiums, educational assistance exclusion, student loan interest deduction,  and the alternative minimum tax.

Estate Tax

The estate tax is reinstated in 2011 but at a much higher rate. Basically with some estate planning, up to $10 million can be excluded by a husband and wife. $5 million for an individual.  There are some options for those who died in 2010.

Business

Business has been given some tax incentives over the next two years.  100 Percent Bonus depreciation is available for certain periods over the next two years along Section 179 expensing.  Research Tax Credits, Small Business Stock incentives and other credits.

Bottom Line

We have only scratched the surface of this new tax changes. You need to sit down with a tax professional to see how this impacts you. There is only a two year period to take advantage of these opportunities. I am sure that in two years,  the tone of the political  and economic environment will be different and the opportunities we have before us will be gone.

We offer free first time consultations to review your situation. Check us out. You have nothing to lose.