Charitable Benefits of the American Taxpayer Relief Act of 2012

On January 1, 2013, both the Senate and House passed the American Taxpayer Relief Act of 2012 (ATRA). The bill includes a number of provisions that will be favorable for philanthropy and charitable giving. 

Capital gains (long-term) taxes may be avoided through gifts of appreciated securities.The capital gains rate of 0% for those in the 10% and 15% bracket and 15% for those in most higher brackets will be extended. However, individuals who are subject to the 39.6% tax bracket will have a 20% capital gain rate. In addition, because capital gains for those with incomes over $250,000 married or $200,000 single will be subject to the 3.8% Medicare tax, the capital gains rate for upper-income persons will be 23.8%.

Charitable Impact: The top federal tax rate for sales of major assets will increase from 15% in 2012 to 23.8% in 2013. In those states that also have a state tax, the combined capital gain rate for major sales will be 28% to 32%. This will greatly increase interest in charitable remainder unitrusts and charitable remainder annuity trusts. Charities should appropriately emphasize the much larger tax savings available in 2013 for charitable trusts.

For further information, please contact Virginia Rivera, Director of Gift Planning, at (831) 459-5227 or