2013 and 2014 Tax Law Change Highlights

Personal Tax

By: Dennis Gardiner, CPA, Partner  |  email

As we enter 2014, a number of changes take place, including those made by the American Taxpayer Relief Act of 2012 (ATRA), signed into law on January 2, 2013, and the provisions in the Patient Protection and Affordable Care Act of 2010 (ACA), scheduled to take effect in 2013 and 2014.  Just a few of the changes set to expire and that are new for 2013 and 2014 are:

  • Increased tax rate on high-income individuals of 39.6% for 2013 and subsequent years, up from 35%.
  • Top rate for capital gains and dividends is raised to 20%, up from 15%.
  • Additional 0.9% Medicare payroll tax for self-employed individuals and wages in excess of certain “higher income-level” threshold amounts.
  • Higher-income taxpayers may be liable for a 3.8% Surtax on Net Investment Income (NII) for 2013.  NII includes dividends, rents, interest, passive activity income, capital gains, annuities and royalties.
  • 50% bonus depreciation deduction available for qualified property placed in service during 2013 expired at 12/31/13.
  • Enhanced Code Sec. 179 expense deduction for the cost of qualifying property is greatly reduced for 2014.
  • 2013 deduction: $500,000 with a $2,000,000 phase-out ceiling
  • 2014 deduction: $25,000 with a $200,000 phase-out ceiling
  • IRS Repair/Capitalization rules that explain when taxpayers must capitalize costs and when they can deduct expenses for acquiring, maintaining, repairing and replacing tangible property take effect.  The new regulations apply to tax years beginning on or after January 1, 2014.
  • The New Markets Tax Credit (NMTC) expired at 12/31/13.
  • Standard mileage rate deduction for business-related driving is reduced one-half cent for 2014; 56½ cents for 2013 to 56 cents for 2014.

Obviously we could not begin to cover every tax law change affecting our individual and business clients for the coming year.  As we visit with you, we will be discussing these changes and their impact on you and your company.  In the meantime, feel free to give your Gardiner Thomsen professional a call to discuss how you may be affected by these changes.  

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