Despite President Barack Obama's campaign promises of no tax hikes for individuals, here's a few tax hikes we can expect to see in 2011:
Boosts in top marginal rates from 33% and 35% to 36% and 39.6%.
A higher rate on capital gains and dividends, but only for those in the top brackets. They will probably be hit with a 20% rate, though it could go a little higher.
Caps on itemized deductions for top earners. Obama's push to limit the value of deductions at 28% ran into a wall of opposition from charitable groups, but he's not giving up. Some way of curtailing the tax break still seems likely by 2011.
No repeal of estate taxes, but count on an exemption of at least $3.5 million, and it could be set as high as $5 million if the Senate prevails. Estate tax legislation will include spousal transfers, making the exemption $7 million or more for couples. The estate tax rate will be capped at 45%, the same as it is now.
More easings for the alternative minimum tax, but no repeal.
What about businesses? Businesses can expect a mixed bag of hikes and cuts, but with a higher total tax bill.
Higher SECA taxes for owners of S firms and partnerships by blocking them in the future from skirting payroll taxes by taking their compensation as dividends instead of salary.
New restrictions on worker classification to make it easier for the IRS to crack down on firms that treat workers as contractors who are really employees.
An elimination of some tax breaks for big corporations, including the deduction for domestic production, accelerated depreciation and incentives for foreign income and oil production.
To read the full Kiplinger article, go here.
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