Higher taxes for upper-income clients were certainly part of the American Taxpayer Relief Act, enacted on January 2 to stave off Washington’s trip off the fiscal cliff. But the hikes are not as bad as some of the worst-case scenarios that were floated. And many things taxpayers like were made, finally, permanent.
From a planning perspective, the taxpayer relief act seals the fate of the Bush tax cuts after 12 years of uncertainty. The six ordinary tax brackets established by the 2001 law––ranging from 10% to 35%––plus the Bush-era marriage-penalty relief, enhanced tax credits and more—are now etched into the Internal Revenue Code. That means they are permanent (unless Congress changes the law, which it could always do someday).