In 2001 and 2003, President Bush enacted a series of tax cuts that lowered income taxes for just about everyone – not only the rich. These tax cuts will expire on December 31, 2010. So far, although both Democrats and Republicans have come up with plans to renew the tax cuts (with some changes), Congress has not actually taken action. Here’s a look at what will happen if Congress allows the Bush tax cuts to expire. (Find out more in A Concise History Of Changes In U.S. Tax Law.)
1. Federal Tax Rates Increase – For Everyone
The lowest federal tax bracket, aside from those individuals who pay no income tax, is currently 10%. This rate applies to individuals with annual taxable incomes in the range of $6,050 to $10,425. If the tax cuts expire, the lowest bracket would become 15%. Every other bracket will increase by 3% except for the current top bracket of 35%, which would increase to 39.6%.
Full Story: 8 Tax Cuts Set To Expire In 2011