Spreading the Higher Tax Rates Around

The "Bush Tax Cuts" are scheduled to expire at the end of this year. How will that effect your wallet? Smart Money breaks it down.

Spreading the Higher Tax Rates Around to Everyone

"The current six rate brackets of 10%, 15%, 25%, 28%, 33% and 35% will be replaced by five new brackets with the higher rates of 15%, 28%, 31%, 36% and 39.6%."

Higher Capital Gains and Dividends Taxes for All

"Right now, the maximum federal rate on long-term capital gains and dividends is only 15%. Starting next year, the maximum rate on long-term gains will increase to 20%. The maximum rate on dividends will skyrocket to 39.6%"

Two Married Income Earners = Jump in Tax Bill

"Starting next year, the joint-filer standard deduction will fall back to about 167% of the amount for singles unless Congress takes action and the president approves. We don’t know if that will happen. If not, lots of lower and middle-income couples will face higher tax bills."

Return of Phase-Out Rule for Itemized Deductions

"If you itemize and have adjusted gross income above about $170,000 ($85,000 if you use married filing separate status), be ready for this phase-out rule to take a toll."

Return of Phase-Out Rule for Personal Exemptions

"Be ready for another tax hike if your adjusted gross income exceeds about $252,000 if you file jointly; about $168,000 if you’re single; about $210,000 if you’re a head of household; or about $126,000 if you use married filing separate status."