By Melanie Pelayo
On Jan. 1, 2013, Congress averted the so-called fiscal cliff by approving new legislation titled the American Taxpayer Relief Act of 2012 (ATRA-2012). President Obama signed the bill into law.
The new law will extend the Bush-era income tax cuts for 98 percent of U.S. taxpayers, but also extends the sweeping changes made to the federal estate and gift tax rules originally enacted under the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (2010 Tax Act).
Higher Taxes for High-Income Earners:
The backdrop for these changes is a change in the effective tax rates for the highest earners. The act makes permanent the tax cuts enacted as part of the 2001 tax act, so that for most Americans, the prior tax rates remain in effect. But higher-income folks face a tougher income tax regime.
