With the passing of the American Taxpayer Relief Act (ATRA), America suddenly shifted from a two dimensional tax system to a four dimensional tax system. Long gone are the days when practitioners only had to consider the regular income tax brackets and the Alternative Minimum Tax (AMT). Today, practitioners must also consider the 3.8% net investment income tax (NIIT) and the new additional brackets for taxpayers whose income exceeds $400,000 (S) and $450,000 (MFJ) (the “supertax”). The supertax subjects high income taxpayers to a 39.6% maximum ordinary income and short-term capital gains tax rate and a 20% maximum dividends and long-term capital gains rate; and, when including the NIIT, those rates increase to 43.4% and 23.8%, respectively.
What does this mean for the practitioner going forward? It means that virtually every financial decision now needs to be analyzed through the lens of this new four dimensional tax system – the regular income tax brackets, the AMT, the NIIT, and the supertax. That is what the Bronze Edition of the Tax Rate Evaluator software does, and more.
The Bronze Edition of the Tax Rate Evaluator is available to PFP Section members and CPA/PFS credential holders. For a more robust calculator with additional features, you may want to consider purchasing the for sale Gold Edition of the Tax Rate Evaluator. See the comparison below.
*AICPA member price; PFP/PFS members save 10% off of this price.