Highlights of the Tax Relief Act of 2010

Published on: 03/11/2011 By: Gorfine, Schiller & Gardyn

Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010

Individual Income Tax:

Tax Rates

  • 10% Rate extended through 2012
  • 15% No change
  • 25%, 28%, 33% and 35% Rates extended through 2012
  • For taxpayers in the 25% or higher tax brackets the capital gains and dividend rates of 15% is extended through 2012.

Deductions

  • Personal Exemptions Phase-out repealed through 2012.
  • Itemized Deduction Limitation repealed for 2010 through 2012.  Taxpayers are no longer subject to an itemized deduction limitation if AGI exceeds a certain level.
  • Tax credit for qualified adoption expenses increased from $5,000 to $10,000 and also provides a $10,000 income exclusion for employer provided assistance programs. These benefits are extended through 2012 as refundable credits.
  • Contributions to Coverdell Education Savings Accounts are increased from $500 to $2,000 and extended through 2012.
  • Employees that receive Employer provided educational assistance may exclude from income $5,250 for undergraduate AND graduate education expenses through 2012.
  • $250 Deduction for elementary and secondary school teachers extended through 2012.
  • Qualified tuition and related expenses extended through 2012.
  • State and Local Sales tax deduction extended through 2012.
  • Taxpayers age 70 ½ may make tax free distributions from an IRA to a qualified charity up to $100,000 per taxpayer, per tax year. Transfers that occurred in January of 2011 may be treated as having been made in 2010.
  • Self Employed Individuals can deduct SE Health Insurance Premiums paid to reduce their social security self employment tax in addition to their income tax liability.

Two-Year AMT Patch

  • AMT Exemption for individuals – $47,450 (2010) and $48,450 (2011)
  • AMT Exemption for Married Filing Joint – $72,450 (2010) and $74,450 (2011)
  • Non refundable personal credits are also allowable against AMT

    • Business Income Tax:

    Depreciation:

    • Beginning in 2010 or 2011 Business can expense up to $500,000 of the first $2,000,000 worth of qualified investment property placed into service under Code Section 179.
    • Also in 2010 and 2011 up to $250,000 of qualified real property (qualified leasehold improvements, qualified restaurant property, and qualified retail improvement property) can be expense under Code Section 179. 
    • 50 % Bonus Depreciation on assets placed in service before September 8, 2010
    • 100% Bonus Depreciation on assets placed in service after September 8, 2010 through December 31, 2011.
    • 50% Bonus Depreciation on all assets placed in service after December 31, 2011 through December 31, 2012.