President Obama has signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the “Act”).  The Act, preserves the Bush tax cuts through 2012, cuts the estate tax to 35 percent and allows a $5 million individual exemption, cuts Social Security payroll taxes, and renews the alternative minimum tax patch for two more years. Also included in the Act is a renewal of certain tax incentives, such as a 100% exclusion on gain from the sale of small business stock.

Highlights of the Act include:

• Federal income tax rates for individuals will remain at the 10%, 15%, 25%, 28%, 33% and 35% graduated rates through 2012.
• The 15% preferential rate for individuals’ long-term capital gains and qualified dividends remains in effect through 2010.
• The Federal estate tax returns in 2011 at a maximum tax rate of 35% and a $5 million exclusion.