Provisions in Fiscal Cliff Legislation Affect Exempt Organizations

Provisions in Fiscal Cliff Legislation Affect Exempt Organizations: Provisions in Fiscal Cliff Legislation Affect Exempt Organizations

January 2013

Reprinted from Exempt Organizations Advisory

On January 1, 2013, the House and Senate passed H.R. 8, The American Taxpayer Relief Act of 2012, a bill to avert the "Fiscal Cliff." The president is expected to sign the bill. [Editor's note: The president signed the bill after this article was written.] The bill contains a number of provisions of interest to tax-exempt organizations.

The bill raises marginal tax rates to a maximum of 39.6 percent for individuals with incomes over $400,000 and married couples filing joint returns with incomes over $450,000. The bill also raises capital gains and dividend rates from 15 percent to 20 percent for taxpayers above the same thresholds. In addition, the individual exemption amount for the estate tax remains at $5 million and is indexed for inflation. The maximum estate tax rate rises from 35 percent in 2012 to 40 percent for years beginning after December 31, 2012.