The impending fiscal cliff could affect your taxes in 2013. The Bush-era tax cuts enacted in 2001 and 2003 are set to expire next year and new Medicare taxes take effect, according to Grant Thornton LLP. Without Congressional action, tax rates will rise to as high as 39.6 percent on ordinary income and 23.8 percent on capital gains.
“Taxpayers should be paying special attention to their year-end tax planning in 2012,” said Mel Schwarz, partner in Grant Thornton’s Washington National Tax Office. “This year, flexibility is the name of the game. Until Congress acts, both businesses and individuals are facing a slew of tax increases in 2013 that will turn traditional tax planning on its head. This year, successful tax planning means preparing to react to the last minute success or failure of Congress to avoid these tax increases.”