Expiring Tax Cuts in 2011

The Bush tax cuts are expected to expire next year causing tax rates to increase in 2011 and impacting capital gains taxes.  The tax on capital gains will increase from the current 15% to at least 20% by next year.  Additionally, the new 3.8% surtax on investment income of upper income filers may apply to you, raising the tax on capital gains to 23.8% as opposed to the 15% in 2010.  And on top of that, the top tax braket for ordinary income (including short term capital gains) increases from 35% to 36.6% in 2011.  For the upper incomers, it would actually increase to 39.6% + the 3.8% surtax totaling 43.4% in 2011.  That’s just a synopsis of what is to come with the changing tax laws and it’s right around the corner.