American Taxpayer Relief Act

Prepared as a service to the Hamilton family, the following are highlights of the American Taxpayer Relief  Act of 2012 “ATRA”:
  • Tax rates remain at 2001 and 2003 levels (10%, 15%, 25%, 28%, 33% and 35%) for individuals with taxable income up to $400,000 ($450,000 for joint filers). Those above the threshold amounts will be taxed at 39.6%.
  • The long-term capital gain and qualified dividend income tax rate for individuals and joint filers in the 39.6% bracket increases to 20%. For others it remains at 15%.
  • The maximum estate and gift tax rate increases from 35% to 40% while the current estate, gift and generation-skipping tax exemptions of $5 million (indexed for inflation) are preserved. For 2013, it is $5.25 million per person.
  • Reinstatement of the “Pease” itemized deduction limitation and personal exemption phase-out for individuals with adjusted gross income over $250,000 ($300,000 for joint filers). This provision will not impact most charitable contributions.
  • A permanent increase in the alternative minimum tax (“AMT”) exemption amount (indexed for inflation).
  • The IRA charitable rollover is renewed for 2012 and 2013. Donors age 70½ or older are eligible to make gifts to public charities of up to $100,000 from their IRAs.

What does this mean for personal and philanthropic planning?

  • Now “permanent” estate and generation-­skipping tax rules present an excellent opportunity to re-visit existing, or make new, estate plans.
  • Gifts of appreciated securities held long-term are attractive for all taxpayers, especially those subject to the higher capital gain tax rate and the 3.8% Affordable Care Act Medicare surtax on investment income.
  • Charitable lead annuity trusts and gifts of a remainder interest in a primary residence are favorable in the current low interest environment.
  • Charitable gift annuities funded with cash provide donors with large tax-free payments.
  • Donors age 70½ or older who do not itemize may find the IRA charitable rollover appealing.

A full description of ATRA prepared by Hamilton’s legal counsel can be viewed at Private Clients Alert.

Contact Information

Office of Alumni Relations


Contact Information

Ben Madonia

Director of Planned Giving
866-729-0317 bmadonia@hamilton.edu

Contact Information

Fred Rogers

Director of Annual Giving
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