The Largest Tax Increase in History &
Other Impending Tax Increases

Unless Congress acts, the following tax increases* will automatically occur for the following tax-years:

2008:

• The exemption for the Alternative Minimum Tax (AMT) will decrease from $44,350 to $33,750 for single filers and from $66,250 to $45,000 for married couples filing jointly.

• Taxpayers will not be allowed to deduct their state and local general sales taxes from their federal income tax. 
  
• Taxpayers will not be able to adjust their income for qualified tuition and related expenses.
  
• Businesses will not be able to claim a tax credit for research, experimentation, and development activities.
  
• First-time homebuyers in the nation’s capital will no longer be able to claim a tax credit.

2009:

• Taxpayers will no longer be able to claim a tax credit for certain residential energy efficient property, a tax credit for the construction of new energy efficient homes, or a tax deduction for energy efficient commercial building property.

2010:

• The Section 179 business expensing cap will decrease from $128,000 (plus inflation after 2008) to $25,000, and the starting point for the phase-out of this deduction will decrease from $510,000 (plus inflation after 2008) to $100,000.

2011:

• The marginal income tax rates will increase as follows:
• --35% bracket will increase to 39.6%
• --33% bracket will increase to 36%
• --28% bracket will increase to 31%
• --25% bracket will increase to 28%
• --10% and 15% brackets will condense to 15
  
• The capital gains rates for individuals will increase from 15% and 0% to 20% and 10%.
  
• Dividends will no longer be taxed at the capital gains rates for individuals, thereby increasing the double taxation of dividends by as much as 62%.
  
• The standard deduction for couples as a percentage of the standard deduction for singles will decrease from 200% to 167%--restoring the marriage penalty.
  
• The top end of the 15% marginal income tax bracket for couples as a percentage of the top end for singles will decrease from 200% to 167%--restoring the marriage penalty.
  
• The child tax credit will decrease from $1,000 to $500.
  
• The “death” tax using the “stepped up” basis will return with a 55% maximum rate (including surtax) and a $1 million exemption, after years of decreasing “death” tax rates, increasing exemptions, and one year using the “carryover” basis to calculate the tax due.

*This list is not exhaustive.  For a more exhaustive list, see this webpage:  http://www.house.gov/jct/x-1-08.pdf.

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