• Couples with taxable income over $450,000 and single filers over $400,000 will see that additional income taxed at 39.6% (up from 35% in 2012).
• Those same filers will pay 5% more on dividends and long-term capital gains (20% vs. 15% in 2012).
• Couples with a taxable income over $250,000 or individuals over $200,000 will be subject to an additional 3.8% Medicare tax on investment income.

• The child tax credit will remain at $1,000 per qualifying child, rather than falling to $500.
• The 10% and 15% tax brackets and the standard deduction for married couples will remain twice that of single individuals, reducing the so-called “marriage penalty.”
• The $5 million threshold for exemption from the estate tax remains in place (though the tax on estates above that amount has increased to 40%).
• The Alternative Minimum Tax was permanently “patched” and inflation adjusted, minimizing the number of taxpayers impacted.
• Several other expired or set-to-expire provisions related to education savings, charitable giving and business costs have been extended as well.

• The new law is expected to generate $600 billion in new revenue over the next ten years – well short of the president’s stated goal of $1.6 trillion.
• •The United States hit its debt ceiling at the end of 2012, and Republicans have promised to fight for spending cuts before raising it again – which could bring taxes back into play if the president stands by his past insistence that new revenues accompany new cuts.

With what we now know, your Financial Advisor is much better positioned to help you plan. We recommend you schedule a meeting or call soon to assess the implications of new tax rules for your specific situation and investment strategy.

For more comprehensive information on the recent changes to U.S. tax law and their implications for investors, visit rwbaird.com and search “managing taxes.”