In the early morning hours of January 1, 2013, the Senate approved the American Taxpayer Relief Act of 2012 (the “Act”) by a vote of 89-8. Less than 24 hours later, the House of Representatives also approved the Act by a vote of 257-167. Late in the evening on January 2, 2013, President Obama signed the Act into law remotely from his vacation in Hawaii bringing to a close, at least temporarily, the fiscal cliff debate.

After the Act, 2013 will bring about higher taxes for most, if not all, Americans. The wealthy will face higher tax rates and increased limitations on deductions, while all working taxpayers will face an increased payroll tax rate. While estate and gift tax exemptions will be set at $5,000,000 per spouse and will benefit from future indexing for inflation, the top estate and gift tax rate will rise from 35% to 40%. The Act also extends through 2013 many business friendly provisions including the current “bonus” depreciation rules, enhanced Section 179 business expensing, and popular credits such as the New Markets Tax Credit and the Work Opportunity Tax Credit.