KANSAS CITY, Mo. -- FOX 4 financial expert Kathy Stepp breaks down the fiscal cliff deal and how it affects you.
The new law includes a higher ordinary tax bracket, a higher capital gains tax rate, a phaseout of itemized deductions and personal exemptions, and an extension of college tax credits. It also extends unemployment benefits through the end of this year for those already receiving benefits.
The new law does NOT extend the 2% payroll tax "holiday" that was always meant to be temporary anyway.
It is also important to note that the AMT "patch" for 2012 will be passed, meaning that a new, favorable formula will be used to calculate the Alternative Minimum Tax for 2012, resulting in lower taxes for tens of millions of Americans.
And remember: the new "Obamacare" taxes take effect in 2013, which include a surtax of 3.8% on investment income for high-income earners and an additional 0.9% Medicare tax for high-income earners.