American Taxpayer Relief Act of 2012: A Summary

There's nothing like waiting until the last minute... and then waiting another day.

Late on January 1, 2013, the fix for the fiscal cliff passed the house and senate. The American Taxpayer Relief Act of 2012, which we can only assume is so named to commemorate the valiant way in which congress has protected American taxpayers by  selflessly stepping up in the final hour to do the damned job it was elected to do, extends and/or makes permanent many of the Bush-era tax cuts for those making less than $400,000 ($450,000 married).

Here are the highlights of the bill:

• 39.6% maximum income tax rate and 20% capital gain tax for taxpayers earning over $400,000 ($450,000 married).
• Tax rates for those earning under that mark remain unchanged from 2012 rates and income tax rates have been made "permanent."
• Permanent patch for the alternative minimum tax (AMT).
• American Opportunity Tax Credit (education credit) extended for five years.
  
• $1,000 Child Tax Credit extended permanently.
• Bonus depreciation extended to 2013.
• $5 million estate/gift tax exemption extended.
• Maximum federal estate tax rate increased to 40%.

In addition to these highlights, a host of other "Bush-era" credits and incentives have been extended or made permanent.

However, the bill did not address the sequestration (across-the-board spending cuts) but rather, postponed the deadline by two months.

While some may say the 11th-hour grandstanding by congress was unnecessary and entirely avoidable had they exercised marginally more maturity than a bunch of procrastinating college freshman, and that the air of self-congratulatory celebration after what was essentially a kick-the-can solution to  the arguably more difficult decisions to be made on spending cuts was patronizing at best, one does have to admit that the ATRA of 2012 will result is less tax for most Americans. In other words, it could have been worse.