The July 26 Senate vote to extend the current tax laws for taxpayers earning less than $250,000 per year was rejected by the House on August 1. Instead, the House extended the cuts for everyone for a full year.
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The Senate had previously rejected the House bill but passed the Family and Business Tax Cut Certainty Act of 2012 that cuts taxes for small businesses, working families, research and development, and renewable energy.
The bill effectively extends the exemption from the alternative minimum tax (AMT) for middle income investors. It would increase the exemption thresholds to $50,600 for individuals and $78,750 for couples filing jointly. In 2013, the exemptions would rise once again to $51,150 for individuals and to $79,850 for married couples.
Non-refundable personal credits against the AMT would also be allowed for 2012 and 2013. The two-year extension of the AMT will cost $132.2 billion over a 10-year period. The bill may indicate that a breakthrough in the stalemate over the coming fiscal cliff is imminent. It is being viewed as preliminary action for tax reform.