What’s on Obama’s wish list? Now that President-elect Obama’s administration is taking shape in Washington, D.C., what can taxpayers expect in the next year? Of course, these initiatives must work their way through Congress during a turbulent economic time, but here are a few key proposals made by Obama late in his campaign:
Economic relief: Obama has proposed a $1,000 emergency rebate for families ($500 for single taxpayers) and penalty-free withdrawals of 15% from 401(k) plans and IRAs up to $10,000. He also wants to temporarily suspend required minimum distributions (RMDs) for retirement accounts.
Income taxes: In addition to extending some of the Bush tax cuts, the new president wants to raise the top two to 36% and 39.6%. He also favors new tax cuts for middle-class workers and higher tax rates for families earning more than $250,000 ($200,000 for single taxpayers). Obama would eliminate tax for senior citizens earning less than $50,000 a year and provide a tax credit of 6.2% for anyone earning less than $75,000 a year.
Estate taxes: The president-elect intends to freeze the 2009 estate tax structure, which features a $3.5 million exemption and a top 45% rate. Another provision would make the federal estate tax exemption transferable from one spouse to another.
Capital gains and dividends: All capital gains would be eliminated for start-up companies and small businesses. But the maximum tax rate for securities sales and qualified dividends would increase from 15% to 20% for families earning more than $250,000 ($200,000 for single taxpayers).
Health care: Obama’s plan provides income-related subsidies for health insurance through a national exchange. Employers that don’t offer health insurance would have to contribute a percentage to the national plan, but small businesses would be exempt or eligible for a refundable tax credit on 50% of premiums.
We will keep a close watch on these new initiatives in the upcoming months.