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The major news services this week universally proclaimed that the “fiscal cliff” had been averted by a last minute deal between congress and the White House. There were many components to the fiscal cliff, some of which have been addressed by the last-minute deal, and many that were not. The revenue components have been resolved, while the more significant spending related issues were simply postponed.

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The best news is the Bush era tax cuts are now permanent, vindicating the former president whose tax cuts bore his name. The 10, 15, 25, 28, and 33 percent tax brackets are now permanent, while individuals earning $400,000 or couples at $450,000 will now pay the 35% up to those amounts, and 39.6% on anything over those levels.

The marriage tax penalty is now permanently fixed. The tax code, before the 2001 EGTRA (Economic Growth and Tax Relief Reconciliation Act), required a husband and wife to pay more in taxes when they filed jointly than they would as single taxpayers. According to calculations from the tax publisher CCH, the marriage tax penalty translates to a nearly 17% increase in taxes for those married couples who file jointly, regardless of bracket.

Everyone who is working will now see more taken out of their paychecks for Social Security. The payroll tax is now reverting from the temporarily reduced 4.2% rate for employees’ portion back to the pre-EGTRA levels of 6.2%. That will mean about $1,000 tax increase for employees earning $50,000 per year.

The Jobs and Growth Tax Relief Reconciliation Act of 2003, or JGTRRA, temporarily reduced the capital gains tax rate. Most capital gains have been taxed at 15 percent for the past nine years, and investors in the 10 percent and 15 percent tax brackets have not paid any taxes on profits from appreciated asset sales. Qualified dividends have been taxed similarly. These rates are now permanent for all but the higher income taxpayers who will pay 20% on dividends and capital gains.

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The Child Tax Credit was extended for another five years which allows each head of household to deduct $1,000 for each qualifying child, as opposed to the pre-JGTRRA deduction of $500. Also, the current levels of the Earned Income Tax Credit were extended until 2017.

The estate tax exclusion amount is retained at $5 million indexed for inflation, but the top rate has increased from 35% to 40%. The estate tax “portability” election was made permanent, which allows the surviving spouse’s exemption amount to be increased by the deceased spouse’s unused exemption amount.

Childcare expense deductions of up to $3,000 for one child and $6,000 for two or more dependents are now permanent.

The so-called AMT Patch is now permanent, and is indexed to inflation. The Alternative Minimum Tax was implemented in 1969 to ensure that wealthy taxpayers were not using tax loopholes or taking excessive tax breaks to reduce their tax liability disproportionately. It was never indexed to inflation, so the fairly high income levels of the AMT 43 years ago are low by today’s standards. For 2012, the exemption amounts are $78,750 for married taxpayers filing jointly and $50,600 for single filers. Relief from AMT for nonrefundable credits is retained.

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The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by

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