Individual Tax Changes for Tax Year 2010

Payroll Tax Changes for Tax Year 2011

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The law provides a reduction of two percentage points in the employee portion of social security taxes and the self-employment tax for 2011.  Employees will have only 4.2 percent social security tax withheld on wages and self-employed individuals will pay only 13.3 percent tax on their net earnings from self-employment in 2011 up to $106,800.  The employer portion of social security taxes remains unchanged at 6.2 percent.

Alternative minimum tax (AMT) relief	Top
The law increased the AMT exemption amounts for 2010 to $47,450 for single taxpayers, $72,450 for married taxpayers filing jointly and surviving spouses, and $36,225 for married taxpayers filing separately. It also allows the use of all nonrefundable personal credits against the AMT.

Educator expenses

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The law extends through 2011 the $250 above-the-line tax deduction for teachers and other school professionals for expenses paid or incurred for books, supplies (other than non-athletic supplies for courses of instruction in health or physical education), computer equipment (including related software and service), other equipment, and supplementary materials used by the educator in the classroom.

Tuition and fees deduction	Top
The law extends through 2011 the above-the-line tax deduction for qualified education expenses.

Deduction for state and local general sales taxes	Top
The law extends through 2011 the election to take an itemized deduction for state and local general sales taxes (in lieu of the itemized deduction for state and local income taxes)

Increased limits and carryforward period for contributions of appreciated real property for conservation purposes	Top
The law extends through 2011 the increased contribution limits and carryforward period for contributions of appreciated real property (including partial interests in real property) for conservation purposes.

Extension of tax-free distributions from individual retirement plans for charitable purposes	Top
The law extends through 2011 the provision that permits tax-free distributions to charity from an individual retirement account (IRA) of up to $100,000 per taxpayer per year. The law also allows individuals to make charitable transfers during January of 2011 and treat them as if made during 2010.

District of Columbia first-time homebuyer credit	Top
The law extends through 2011 the $5,000 first-time homebuyer credit for the District of Columbia.

Refund and tax credit disregard for means-tested programs

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Under current law, the refundable portion of the earned income credit and child tax credit do not make households ineligible for means-tested benefit programs and these tax credits do not count as income in determining eligibility (and benefit levels) in means-tested benefit programs and also do not count as assets for specified periods of time. Without them, the receipt of a tax credit would put a substantial number of families over the income limits for these programs in the month that the tax refund is received.  The provision disregards all refundable tax credits and refunds as income for federal or federally-assisted means tested programs.