I don’t know about you, but I was surprised that Congress actually passed a tax bill in time to avoid a huge log jam for the 2013 tax filing season. The law is not all that bad either, or maybe my expectations for this Congress are so low that any law looks good to me. Anyway, they did make some fixes that were long overdue.
Congress finally addressed the Alternative Minimum Tax in a reasonable fashion by permanently increasing the exemption amount and adding a provision for adjusting it for inflation so they do not have to come back to this every year. If you are unfamiliar with the Alternative Minimum Tax just consider yourself lucky and move on. Wonder of wonders, we finally have a permanent estate tax exemption at $5,000,000 plus inflation adjustments. For several years there has been such uncertainty in the estate planning area that people could not do confident planning in this area. Now that we have some surety we can make reasonable decisions about our estates. We also have permanent tax rates consisting of the current rates with the addition of a top rate of 39.6% on high incomes.
Most of the other provisions in the law are either for one year or for five years, giving Congress more time to address these important issues. Even though there are many unanswered questions or short-term fixes, at least it does not look like they will have to come back half-way through the tax filing season to make last minute or retro-active changes. Halleluiah!