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Fiscal Cliff: Proposals to Extend the 2001-2010 Tax Cuts

The Tax Policy Center has analyzed several approaches to extending some of the tax cuts originally passed in 2001 through 2010. Click on an option below to read a brief description and to see links to tables showing the distributional effects of the tax changes.

Extend all 2001-2003 tax cuts and 2012 estate and gift tax law (Senate Republican proposal S.3413)
Baseline: Current Policy


Permanently extend all 2001-2003 tax cuts except on incomes above $1 million; tax capital gains and qualified dividends at 20 percent in the top bracket; allow the tax cuts enacted in 2009 to expire; and extend 2012 estate and gift tax law (Speaker Boehner’s “Plan B” proposal)
Baseline: Current Policy


Extend all 2001-2009 tax cuts except on incomes above $200,000/$250,000; tax capital gains and dividends at 20 percent in the top two brackets; and extend 2009 estate and gift tax law (Senate Democratic proposal, S.3412)
Baseline: Current Policy
Incremental Effects of Raising High-Income Threshold


Extend all 2001-2009 tax cuts except on incomes above $200,000/$250,000 and extend 2009 estate and gift tax law
Baseline: Current Policy


Allow top two individual income tax rates to return to 36 percent and 39.6 percent
Baseline: Current Policy


Descriptions of Proposals to Extend the 2001-2010 Tax Cuts



Extend all 2001-2003 tax cuts and 2012 estate and gift tax law (Senate Republican proposal, S.3413).
A description of this proposal can be found in TPC’s analysis of Senate Proposals to Extend the 2001-2010 Tax Cuts.

TPC has produced distributional analysis of this option against both current law and current policy for the 2013 calendar year.




Permanently extend all 2001-2003 tax cuts except on incomes above $1 million; tax capital gains and qualified dividends at 20 percent in the top bracket; allow the tax cuts enacted in 2009 to expire; and extend 2012 estate and gift tax law (Speaker Boehner’s “Plan B” proposal).
This proposal, relative to current policy, would allow the top individual income tax rate to return to 39.6 percent by creating a new 39.6 percent tax bracket. The bracket would apply to taxable income above $1 million (half that amount for married couples filing separately). This amount would be indexed for inflation after 2013. The proposal would also tax capital gains and qualified dividends at 20 percent for taxpayers in the top bracket.

This plan would permanently patch the AMT by setting the 2012 exemption amounts at $78,750 for married couples filing jointly ($50,600 for singles) and indexing that amount for inflation plus 0.75 percentage points after 2012. The tax bracket threshold and exemption phase-out threshold would be similarly indexed for inflation plus 0.75 percentage points, and personal non-refundable credits would be allowed regardless of tentative AMT.

The proposal would not extend the 2009 expansions of the child tax credit (CTC) and earned income tax credit (EITC), and would repeal the American Opportunity Tax Credit (AOTC).

TPC has produced distributional analysis of this option against both current law and current policy for the 2013 calendar year.

See the Joint Committee on Taxation's estimate of the revenue effects of this proposal.



Extend all 2001-2009 tax cuts except on incomes above $200,000/$250,000; tax capital gains and dividends at 20 percent in the top two brackets; and extend 2009 estate and gift tax law (Senate Democratic proposal, S.3412).
A description of this proposal can be found in TPC’s analysis of Senate Proposals to Extend the 2001-2010 Tax Cuts.

TPC has produced distributional analysis of this option against both current law and current policy for the 2013 calendar year. TPC also examined the incremental effects of raising the high-income thresholds to $500,000 or $1 million.




Extend all 2001-2009 tax cuts except on incomes above $200,000/$250,000 and extend 2009 estate and gift tax law.
This option is the same as the Senate Democratic proposal (S.3412) described above except that it taxes qualified dividends at ordinary rates for taxpayers in the top two brackets.

TPC has produced distributional analysis of this option against current policy for the 2013 calendar year.




Allow top two individual income tax rates to return to 36 percent and 39.6 percent.
This option, relative to current policy, would allow the top statutory individual income tax rate to increase from 35 percent to 39.6 percent and allow the second highest individual income tax rate to increase from 33 percent to 36 percent for taxpayers with taxable income above relevant thresholds:
  • Married couples filing jointly: $250,000 less the standard deduction and two personal exemptions (half that amount for married couples filing separately)
  • Single filers: $200,000 less the standard deduction and one exemption
  • Heads of household: $225,000 less the standard deduction and one exemption
The thresholds are indexed for inflation after 2009.

TPC has produced distributional analysis of this option against current policy for the 2013 calendar year.