The American Taxpayer
Relief Act of 2012
Fact Sheet
Congress passed the American Taxpayer
Relief Act of 2012 on January 1, 2013—perhaps
a day late, but not a moment too soon.
The wide-ranging tax law affects taxpayers in
a variety of ways, and there are important new
features on charitable giving donors should
keep in mind—including the IRA Charitable
Rollover. Here are some of the key items
included in the new law:
• The top tax rate is 39.6% for income over
$400,000 (for singles) or $450,000 (for married couples)
• The income tax “marriage penalty” is
addressed through widening the 15%
income tax bracket and increasing the standard deduction for married taxpayers filing
jointly
• Capital gains and qualified dividends have a
higher top tax rate of 20% for higherincome taxpayers
• The payroll tax cut was left out of the new
law, which means the social security tax rate
returns to 6.2% this year
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• Several tax credits are extended, such as the
child tax credit, the adoption credit and the
American Opportunity Tax Credit
• Certain deductions are extended, such as
the option to deduct state and local sales tax
(rather than the income tax) and the abovethe-line deduction for tuition and related
expenses
• Both the phase-out of personal exemptions
and the limitation on itemized deductions
(“Pease limitation”) are back
• The exemption amounts for the Alternative
Minimum Tax (“AMT”) are increased and
set to rise with inflation from year to year
(finally—a permanent AMT fix)
• The top tax rate for estates, gifts and generation-skipping transfers rises from 35% to
40% (though the applicable exclusion
amount of approximately $5 million remains
the same, as does the option of portability
for the unused applicable exclusion amount
of a deceased spouse)
• The enhanced deduction rules for contributions of real property for conservation purposes are kept in place
• The IRA Charitable Rollover is extended
through 2013, allowing someone age 70 1⁄2 or
older to direct a distribution straight from
an IRA to a charity as a gift without including the distribution amount on federal
income tax returns
Plus, there are two temporary rules to help
eligible donors interested in the IRA Charitable
Rollover:
• If a donor took an IRA distribution in
December 2012, the donor can make a cash
donation up to that distribution amount
before February 1, 2013, and treat it like an
IRA Charitable Rollover (which excludes it
from their 2012 income)
• If a donor completes an IRA Charitable
Rollover during January 2013, the distribution will be considered done on December
31, 2012
In sum, the new tax law looks a lot like the
old tax law, except that higher-income taxpayers will pay more as a result of increased rates
and dampers on the ability to take deductions
and personal exemptions. But, unlike other
recent major tax legislation, many of these provisions are permanent in nature. Be sure to discuss the changes with your accountant or tax
advisor, and keep charitable giving in mind as a
way to match your personal planning with your
philanthropic goals.
Alverno College
Figures in our examples are based on
average interest rates, and may be
different at the time of a gift. Tax
information provided herein is not
intended as tax or legal advice and
cannot be relied on to avoid statutory
penalties. Always check with your tax
and financial advisors before
implementing any gift.
ATRA0113
Carol Wacker, CFRE
Office of Advancement
Alverno College
P.O. Box 343922
Milwaukee, Wisconsin 53234-3922
414-382-6468
Carol.wacker@alverno.edu
www.alverno.edu
The American Taxpayer Relief Act of 2012 — FACT SHEET