Congress Passes Bill to Avoid Fiscal Cliff

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In January of 2013, Congress passed a bill to avert the fiscal cliff, which maintains the Bush-era tax cuts for individuals earning less than $400,000 per year and couples earning less than $450,000.

The bill raises taxes for those making more than these income thresholds, increasing tax rates from 35 to 39.6 percent for individuals making more than $400,000 and couples making more than $450,000 per year. Taxes on capital gains and dividends will also increase to 20% for individuals and couples earning income above these thresholds.

The bill also contains other provisions. Among those, it extends unemployment insurance for a year; caps itemized deductions for individuals making $250,000 and for married couples making $300,000; permanently adjusts the alternative minimum tax for inflation; raises the estate tax to 40%; and renews many childcare, tuition, research and development, and business related tax credits. In addition, it delays a series of automatic cuts in federal spending for two months.

Despite this measure, Social Security tax rates will return to 6.2% for 2013, up from the temporary rate decrease (4.2%) last year.

Source: CNN, National Journal

Additional Resources

Tax Changes Affecting 2013 Payrolls – What You Need to Know (Source: ADP)
2013 Federal Tax Legislation - What to Expect  (Source: ADP)
Fiscal Cliff Tax Deal: What Does It Mean for Small Business? (Source: Forbes)
Here's What's in the Fiscal-Cliff Deal (Source: National Journal)
Congress Passes Fiscal Cliff Act (Source: Journal of Accountancy)

6 Post-Election Workplace Issues You Need to Know

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The national election results suggest that the overall political landscape will remain largely unchanged in Washington, for at least the next two years until the 2014 midterm election. As a result, HR professionals should expect similar legal trends to persist at the federal level, with President Obama and split control of Congress between the Republicans and Democrats. Here are six (6) workplace issues you need to know:

1. Fiscal Cliff

The fiscal cliff is approaching and could result in numerous spending cuts and large tax increases that will affect both your business and employees on January 1, 2013. Notable taxes set to increase which may apply to your employees include the payroll tax, Bush-era tax cuts, Obama-era tax cuts, AMT patch, and taxes associated with health care reform. In addition, large cuts in defense spending are set to go into effect at the same time. Congress still has time to act before all of these changes go into effect, but no agreements have yet been reached.
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