Tax Breaks That Expired This Year

Last updated on December 17, 2012

December is the month of looking back at the year, but with the country looking straight ahead at the fiscal cliff, everybody is talking about the coming year. The new year will see the end of many tax breaks, but that is nothing new. The beginning of 2012 also saw the end of many tax breaks, both individual and businesses.

One biggie individual tax break that expired this year was the relief from the alternative minimum tax. This tax was created to make sure that the rich do not use tax breaks to avoid paying any federal taxes. Along with it, state and local sales tax deduction also expired this year. This tax was for those who live in states including Alaska, Florida, Washington, Texas etc. where there are no state income taxes. Taxpayers could use this itemized deduction instead of going for deducting state and local income taxes. These two tax breaks cost $132 billion and $4.4 billion respectively.

As far as business tax breaks are concerned, this year saw the end of many. These include the $14.3 billion tax credit for manufacturers and other businesses that invest in research and development, and the $11.2 billion exemption that allows banks, insurance companies etc. to protect the profits of foreign subsidiaries from being taxed by the United States. Many more tax breaks are ending in 2012 for both individual taxpayers and businesses.

With drastic changes in taxes starting next year, most households will need to begin planning their taxes anew beginning next year.