The House adopted "The American Taxpayer Relief Act of 2012" (H.R. 8) by a vote of 257-167. The Senate adopted the same bill by a vote of 82-8 the previous day.
H.R. 8 addressed some of the key issues in the "fiscal cliff" debate and laid the groundwork for additional debate in the near future on "sequestration," spending cuts, tax reform, and the debt ceiling.
Although H.R. 8 delayed implementation of sequestration until March 2013, Congress did not replace sequestration with an alternative plan for budget reduction by this deadline and automatic spending cuts required by sequestration took place. Based on information from the Washington Post, key provisions of H.R. 8 include:
Charitable Giving Incentives
- Return of the "Pease" limitation for taxpayers with annual incomes of $250,000 individuals/ $300,000 joint filers. The Pease limitation reduces itemized deductions by the lesser of 3 percent of income as adjusted for inflation or 80 percent of total allowed itemized deductions for that tax year. Click here to view how Pease affects the charitable deduction.
- One year extension of the following charitable giving incentives:
- The IRA charitable rollover Enhanced deduction for contributions of food inventory by corporations.
- Enhanced deduction for donations of property for conservation purposes.
H.R. 8 does not extend expired provisions for book inventory and qualified computer contributions.
Automatic spending cuts (Sequestration)
Delays the effective date of automatic spending cuts until March 1, 2013. Offsets the delay by adding to discretionary spending (half to defense, half to non-defense) and to taxes on retirees' transfers from traditional to Roth IRAs.
Other Key Tax Provisions