SZD Tax Alert: Tax Relief Act of 2010 passed by Congress

by Ice Miller LLP

President Obama signed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 into law on Dec. 17, 2010. The Tax Relief Act provides extensive tax relief for taxpayers at all income levels. Estimated to cost $858 billion, the Act includes a two-year extension of the Bush-era tax cuts, an extension of the alternative minimum tax (AMT) patch, a temporary payroll tax reduction, restoration of the estate tax for individuals with estates in excess of $5 million and extensions of several other tax breaks.

Income tax

The current ordinary income tax rates will remain the same in 2011 and 2012. The highest ordinary income tax rate will continue to be 35 percent and both the capital gains rate and dividend rate will continue to be 15 percent. If Congress had not agreed on legislation prior to the end of the year, the highest ordinary income tax rate would have increased to 39.6 percent, the capital gains rate would have increased to 20 percent, and the dividend rate would have increased to 39.6 percent.

Estate and gift tax

After years of debate, Congress agreed to increase the estate tax exemption amount to $5 million per person or $10 million per couple. Additionally, the gift tax exemption amount and the generation-skipping transfer tax exemption will be increased to $5 million and unified with the estate tax exemption. The Act also changes the estate tax to allow the $5 million exemption to be portable, meaning the surviving spouse can use the unused estate tax exemption of their deceased spouse. The top tax rate will be 35 percent for estate, gift and generation-skipping transfer tax. The changes to estate and gift tax under the Act will be effective for two years, leaving Congress to negotiate again in 2012.

A choice will need to be made for individuals who died in 2010 with estates in excess of $5 million - pay no estate tax and apply the carry over basis rules or pay estate tax based on a $5 million exemption and 35 percent tax rate and receive a step-up in the basis of the assets to fair market value.

Payroll tax reduction

During 2011, employees and self-employed workers will receive a two-percentage point reduction in Social Security payroll tax, bringing the rate paid by employees down to 4.2 percent and the rate paid by self-employed individuals down to 10.4 percent.

AMT relief

The AMT patch is extended for 2010 and 2011. The extension will keep the AMT exemption at near current levels and allow personal credits to offset AMT. Without the patch, 21 million additional taxpayers may have been subject to AMT for 2010.

Unemployment insurance

The Tax Relief Act provides for a 13 month extension of unemployment insurance for approximately two million unemployed Americans that would have lost their benefits at the end of this year.

If you have questions about the impact of the Tax Relief Act on you, your business or your estate plan, please contact an SZD attorney for more details.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ice Miller LLP | Attorney Advertising

Written by:

Ice Miller LLP

Ice Miller LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.