Controlling Your Wealth

Evaluating Critical Tax Changes for 2013

Many of the unique opportunities in the areas of tax, gift and estate planning available in 2012 are scheduled to sunset in 2013. By taking action now, you may be able to take advantage of today’s low asset values, estate tax rates and interest rates for the benefit of your estate and your loved ones.

Changes that will have the greatest impact on families with significant wealth include:

  • Top ordinary income tax bracket increases to 39.6%
  • New taxes will be imposed pursuant to the Patient Protection and Affordable Care Act1
    • 0.9% payroll Medicare tax
    • 3.8% tax against un-earned income (e.g., interest income, rental income, and dividends)2
  • Long-term capital gains tax increases to 20%
  • Dividend rates revert from capital gains treatment to the ordinary income tax brackets
  • Federal estate and gift tax system reverts to pre-2001 levels

The below table highlights the differences between 2012 and 2013 federal tax levels, and offers ideas on actions you can take this year to minimize your tax impact today and in the future.

1 For single taxpayers earning more than $200,000 and married taxpayers earning more than $250,000
2 For single taxpayers earning more than $200,000, for married taxpayers earning more than $250,000, and for all estates and trusts

City National Bank, as a matter of policy, does not give tax, accounting, regulatory or legal advice. The effectiveness of the strategies presented in this document will depend on the unique characteristics of your situation and on a number of complex factors. Rules in the areas of law, tax, and accounting are subject to change and open to varying interpretations. The strategies presented in this document were not intended to be used, and cannot be used for the purpose of avoiding any tax penalties that may be imposed. The strategies were not written to support the promotion or marketing to another person any transaction or matter addressed. Before implementation, you should consult with your other advisors on the tax, accounting and legal implications of the proposed strategies based on your particular circumstances.