The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 now goes to President Obama for his signature.

On December 16, 2010, the House of Representatives adopted, without change, the Senate version of H.R. 4853, the "Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010." The bill provides a two-year extension of the so-called Bush tax cuts and extends a variety of other expiring provisions, including alternative minimum tax relief, the research credit, and many other tax incentives that expired at the end of 2009 or which expire at the end of 2010. The bill also includes several other temporary provisions, including new estate tax rules for 2011 and 2012 (with an election for 2010), a payroll tax reduction, 100% expensing, and an extension of unemployment benefits.

This attached table shows the highlights of the provisions in the package.

Tax Provision

Expiration Date
(if temporary)

H.R. 4853 As Passed by Congress

2001 and 2003 individual income tax rates

2010

2-year extension of 2001 and 2003 rates

Dividend tax rate

2010

2-year extension of 2001 and 2003 rates

Capital gains tax rate

2010

2-year extension of 2001 and 2003 rates

Other 2001 and 2003 tax cuts: Increase in child tax credit (and certain other provisions for families with children), marriage penalty relief and EITC simplification, various education incentives, and repeal of limitation on itemized deductions and personal exemption phase-out

Generally 2010

2-year extension of 2001 and 2003 rules (see Extender Table for details of education and other incentives)

Estate tax

Estate tax repealed during 2010, estate tax rules return to pre-2001 rules in 2011

New estate tax rules ($5 million unified estate and gift tax exemption equivalent, 35% rate) apply for 2010-2012, with an election to apply existing or new estate tax law for decedents dying in 2010

AMT relief

2009

2-year extension of "AMT patch"

Extenders

2009 and 2010

Generally, only "traditional" extenders extended through 2011(see Extender Table for details)

Earned Income Tax Credit (EITC), child credit, and American Opportunity Tax Credit provisions from ARRA 2009

2010

EITC, child credit, and American Opportunity Tax Credit extended for 2 years (through 2012)

Bonus Depreciation

2010

Extended for 2012 (100% expensing covers 2011)

Election to accelerate AMT credit in lieu of additional first year depreciation

2010

Applies through 2012

Small Business Expensing

2011

1 year extension of $125,000 limit through 2012

Unemployment Compensation

Nov. 2010

Roughly 13-month extension, from November 30, 2010, to January 3, 2012, plus four additional "related matters"

Payroll Tax Reduction

New

1-year 2%, "employee-side" payroll tax reduction for 2011 calendar year

100% Expensing

New

100% expensing for property eligible for bonus depreciation acquired after September 8, 2010, and before January 1, 2012

Not Included

Several high profile provisions were not included in the package. Omitted from the package are:

  • Revenue raisers, such as the controversial, "carried interest" proposal
  • Repeal of the new Form 1099 requirements imposed by the health care reform bill
  • Extension of many temporary provisions included in the American Recovery and Reinvestment Act of 2009, including:
    • The Making Work Pay Credit
    • Build America Bonds
    • The qualifying advanced energy project credit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.