The Obama administration allowed the Bush-era tax cuts to expire for top earners as part of the American Taxpayer Relief Act of 2012. Beginning in 2013, the Top Marginal Income Tax Rate reverted to 39.6% for individuals earning over $400,000 and couples earning over $450,000.
Significance:
- Majority of early 2000’s Bush Tax cuts set to expire in “Fiscal Cliff” with expirations in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA)
- The American Tax Payer Relief Act of 2012 (ATRA) extended many Bush Tax cuts while letting some expire avoiding the full effects of the Fiscal Cliff.
- The ATRA significantly increased the AMT exemption amounts and indexed them for inflation
- Top Marginal Tax Rate increased from 35% to 39.6% for incomes over $400,000 ($557,000 in 2025)
- Despite significant financial events from the 2008 Great Recession, those were mostly handled through credits and not reductions in Marginal Tax Rates
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