The following are select tax topics affecting individuals and businesses for tax year 2011. Some of the provisions, implemented in prior years, continue as noted below.
Itemized Deductions: The limitation on itemized deductions has been repealed, and deductions can be fully utilized without adjusted gross income (AGI) limitations. Limitation is scheduled to return in 2013.
Personal Exemptions: AGI phase-out rules continue to be inapplicable for personal exemptions. The personal exemption is $3,700 for 2011, an increase of $50. Phase-out based on AGI is scheduled to return in 2013.
Alternative Minimum Tax (AMT): Exemption increased to $48,450 for single taxpayers, $74,450 for joint filers and $37,225 if married and filing separately.
Reduced Tax Rates Continue: 2011 tax rates for individuals remain at 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent.
Payroll Tax Holiday: Reduced employee share of Social Security taxes under the Federal Insurance Contributions Act (FICA) reduced from 6.2 percent to 4.2 percent. This reduction in FICA also applies to the self-employment tax, reducing the rate from 15.3 percent to 13.3 percent. This provision is currently set to expire at the end of February 2012.
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