After reading it I decided it was important to research more details, per CNN Money:
Capital Gains & Dividends
- The bill will extend for two years the 15 percent rate on long-term capital gains and dividends. For low-income taxpayers, that rate will be 0 percent.
- After 2010, the rates are scheduled to revert to 20 percent for long-term capital gains - 10 percent for those in the lowest tax bracket - and one's top income tax rate for dividends.
- The key beneficiaries would be those with larger taxable trading accounts (NYC Money might like this) with dividend paying stocks.
- Tax year 2006 AMT income exemption levels are increased. The new exemption levels will be $42,500 for single filers, up from $40,450, and $62,550 for joint filers, up from $58,000.
- In addition, when calculating whether they're subject to AMT, taxpayers will be allowed to use all nonrefundable personal credits to offset AMT liability. Normally, these credits often end up being disallowed under AMT.
ROTH's available to everyone
- All taxpayers, not just those with modified adjusted gross income of $100,000 or less, to convert their traditional IRAs to Roth IRAs starting in 2010.
- A partner from Delloite Tax, LLP said that conversion makes sense unless the tax payer expects to be in a substantially lower tax bracket at retirement (think 15% bracket).
- There is an expectation that taxes owed for the conversion would come from savings in taxable accounts, versus diminishing your retirement accounts.
- This is one you need to spend a little time analyzing. The right decision could add substantial savings, while the wrong decision can have substantial costs. The CNN article does a good job illustrating them.
I, personally, am pleased with the tax changes, though I'm said to hear that some tuition tax credits were removed. That's a shame. Then again maybe it will put greater pressure to reform the corrupt and non-market driven higher education system's tuition policy.
Have a wonderful day,