Recently reported by Americans for Tax Reform, beginning on January 1, 2011, virtually everyone will be affected by tax increases based on expirations of prior tax cuts and recently enacted laws. Below is a list of a few tax changes coming in 2011, however this by no means is a complete listing of tax changes:
Personal income tax table changes. The income tax rates for all Americans will be increased by increasing the rates for each bracket of income. The phasing out of itemized deductions and personal exemptions will also continue resulting in increased tax rates as well. If the tax rate tables revert back to pre-2001 rates the changes to the income tax tables are: The 10% bracket rises to 15%, the 25% bracket rises to 28%, the 28% bracket rises to 31%, the 33% bracket rises to 36%, and the 35% bracket rises to 39.6%.
Marriage tax increases. The correction made in 2003 to reduce the effect of the “marriage penalty” will expire, increasing taxes to a large portion of married couples. Also the standard deduction will no longer be doubled for married couples relative to the single level.
Family tax increases. The child tax credit that is currently $1,000 per child will be reduced to $500 per child. The dependent care and adoption tax credits will also be cut.
The AMT will affect more tax payers. The Alternative Minimum Tax, which was enacted in 1969 to affect very few taxpayers, continues to be un-indexed for inflation. This will lead to an estimated 28.5 million taxpayers to pay taxes at a higher level.
Over-the-counter medicine. The health care reform act will take away the ability of Americans to use tax-free health savings accounts (HSA), flexible spending accounts (FSA), or health reimbursement accounts (HRA) to pay for non-prescription, over-the-counter medicines.
HSA withdrawal tax. The additional tax on non-medical withdrawals from an HSA will increase from 10 to 20 percent. This is technically a penalty tax on top of the normal income taxes you will have to pay for this withdrawal amount.
Name-brand drug tax. Drug manufacturers will have an additional tax put on them for their brand-name drugs. This will obviously be passed down to the individuals who purchase these drugs, ultimately increasing the cost of needed medication.