President-elect Obama’s tax plan

Tax-Plan Highlights

Here are some of the details of President-elect Obama’s tax plan.

INCOME TAX
Maintain current tax rates of 10% to 28% for most Americans. Reinstate top tax rates of 36% and 39.6% on joint income of more than $250,000 ($200,000 for individuals).

CAPITAL GAINS/DIVIDENDS
Maintain maximum rate of 15% for most taxpayers. Boost top rate to 20% for investors with income of more than $250,000. Under current law, taxpayers in the two lowest income-tax brackets pay zero capital gains in 2008, 2009 and 2010. Eliminate capital-gains taxes on start-ups and small businesses to encourage innovation.

RETIREMENT ACCOUNTS
Suspend mandatory distributions for those 70½ and older. Permit taxpayers to withdraw up to $10,000 from retirement accounts penalty-free; withdrawals would still be subject to income taxes.

NEW TAX CUTS
Tax credit of up $1,000 to offset Social Security taxes for low-wage earners. Eliminate income tax for seniors making less than $50,000. Double the tax credit for college expenses to $4,000. Create a 10% mortgage tax credit for those who don’t itemize. Provide a $1,000 rebate funded by a windfall-profits tax on oil companies to offset high energy costs.

AMT
Maintain current exemption and index to inflation.

ESTATE TAX
Set exclusion at $3.5 million per person ($7 million per couple); keep rate at 45%.

SOCIAL SECURITY
Maintain current wage base of $106,800, indexed for inflation. Impose additional tax of 2% to 4% paid by employers and employees on earnings exceeding $250,000 — but delay implementation for at least ten years.

CORPORATE TAX
Keep top rate at 35%; close corporate loopholes.

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