An Overview of the Tax Provisions in the
American Taxpayer Relief Act of 2012
Margot L. Crandall-Hollick
Analyst in Public Finance
January 10, 2013
Congressional Research Service
7-5700
www.crs.gov
R42894
CRS Report for Congress
Pr
epared for Members and Committees of Congress

An Overview of the Tax Provisions in the American Taxpayer Relief Act of 2012

Summary
On December 31, 2012, a variety of temporary tax provisions which were part of the “fiscal cliff”
expired. Two days later, the American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240)
retroactively extended, and in certain cases modified, many of these provisions. The short time
period between the expiration of these provisions and the enactment on January 2 of ATRA
retroactively meant that from the perspective of all but upper-income taxpayers, income taxes
remained unchanged between 2012 and 2013 (i.e., the amount of income tax withheld from their
paycheck and the availability of certain tax deductions, credits, and exclusions remained
unchanged).
This report provides an overview of the tax provisions (Titles I-IV and Title X of P.L. 112-240)
included in the “fiscal cliff deal,” including
• the permanent extension and modification of the 2001 and 2003 tax cuts, often
referred to collectively as the “Bush-era tax cuts”;
• the temporary extension of certain tax provisions originally included as part of
the American Recovery and Reinvestment Act (ARRA; P.L. 111-5), often
referred to as the “2009 tax cuts”;
• the permanent extension of the alternative minimum tax (AMT) patch;
• the temporary extension of a variety of other temporary expiring provisions for
individuals, businesses, and energy often referred to as “tax extenders”; and
• the expansion of in-plan conversions of traditional employer-sponsored
retirement accounts (like 401(k) plans) to employer-sponsored Roth accounts
(like Roth 401(k) plans).
ATRA did not extend the payroll tax cut. The payroll tax cut—temporarily enacted for 2011 and
2012—reduced Social Security taxes from 6.2% to 4.2% for employees and from 12.4% to 10.4%
for the self-employed on the first $110,100 of wages in 2012. In addition, P.L. 112-240 did not
change another component of the fiscal cliff, namely new taxes primarily related to Medicare and
enacted as part of the Affordable Care Act (ACA; P.L. 111-148, as amended), which went into
effect at the beginning of 2013.
The Joint Committee on Taxation (JCT) estimates that the tax provisions of ATRA (Titles I-IV
and Title X) would reduce revenues by $3.9 trillion over the 10-year budgetary window from
2013 to 2022 in comparison to the official current law baseline. (The official current law baseline
was an estimate of future revenue if all temporary tax provisions had expired as originally
scheduled.) Of this $3.9 trillion, $1.5 trillion (39%) is a result of permanently extending certain
income tax provisions of the 2001 and 2003 tax cuts, $369.1 billion (9%) is a result of
permanently extending and modifying estate tax provisions, $134.2 billion (3%) is a result of
temporarily extending 2009 tax cut provisions, $1.8 trillion (46%) is a result of permanently
extending the AMT patch, and $76.3 billion (2%) is a result of temporarily extending certain
temporary expiring provisions and “tax extenders.” In contrast, using a current policy baseline
which estimates future revenues if all temporary tax provisions (excluding the payroll tax cut) had
been extended, the Administration has stated that these tax provisions would raise revenues by
$618 billion.
Congressional Research Service

An Overview of the Tax Provisions in the American Taxpayer Relief Act of 2012

ATRA includes other non-tax provisions, including those related to budget sequestration,
emergency unemployment benefits, and Medicare. These and other policies which are not related
to tax policy are not examined in this report. For an overview of all the provisions of ATRA, see
CRS Report R42884, The “Fiscal Cliff” and the American Taxpayer Relief Act of 2012,
coordinated by Mindy R. Levit.

Congressional Research Service

An Overview of the Tax Provisions in the American Taxpayer Relief Act of 2012

Contents
Overview .......................................................................................................................................... 1
Individual Income and Estate Tax Cuts (2001, 2003, and 2009 Tax Cuts) ...................................... 3
Legislative History .................................................................................................................... 3
Income Tax Provisions Enacted in 2001 and 2003 (The Bush-Era Tax Cuts) .................... 3
Estate Tax Provisions of the Bush-Era Tax Cuts ................................................................. 4
ARRA Tax Provisions (“2009 Tax Cuts”) ........................................................................... 5
Changes Made by ATRA ........................................................................................................... 5
Budgetary Cost .......................................................................................................................... 6
AMT Patch ..................................................................................................................................... 16
Legislative History .................................................................................................................. 16
Changes Made by ATRA ......................................................................................................... 17
Budgetary Cost ........................................................................................................................ 17
Other Expiring Provisions and “Tax Extenders” ........................................................................... 17
Legislative History .................................................................................................................. 17
Individual .......................................................................................................................... 17
Business ............................................................................................................................. 18
Charitable .......................................................................................................................... 18
Energy ............................................................................................................................... 18
Community Development ................................................................................................. 19
Disaster Relief Provisions ................................................................................................. 19
Changes Made by ATRA ......................................................................................................... 19
Budgetary Cost ........................................................................................................................ 19
In-Plan Roth Conversions .............................................................................................................. 28
Legislative History .................................................................................................................. 28
Changes Made by ATRA ......................................................................................................... 29
Budgetary Cost ........................................................................................................................ 29

Tables
Table 1. An Overview of the Individual Income and Estate Tax Provisions of ATRA in
Comparison to the Hypothetical Extension or Expiration of All of These Provisions,
2013 .............................................................................................................................................. 7
Table 2. Approximate Tax Brackets Under ATRA in 2013 by Type of Tax Filer ......................... 15
Table 3. Temporary Tax Provisions & “Tax Extenders” Which Expired in 2011 & 2012 ............. 21

Contacts
Author Contact Information........................................................................................................... 29

Congressional Research Service

An Overview of the Tax Provisions in the American Taxpayer Relief Act of 2012

Overview
On December 31, 2012, a variety of temporary tax provisions which were part of the “fiscal cliff”
expired.1 Two days later, the American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240)
retroactively extended and in certain cases, modified, many of these provisions.2 The short time
period between the expiration of these provisions and the enactment on January 2 of ATRA
retroactively meant that from the perspective of all but upper-income taxpayers, income taxes
remained unchanged between 2012 and 2013 (i.e., the amount of income tax withheld from their
paycheck and the availability of certain tax deductions, credits, and exclusions remained
unchanged).
This report provides an overview of the tax provisions (Titles I-IV and Title X of P.L. 112-240)
included in the “fiscal cliff deal,” including
• the permanent extension and modification of the 2001 and 2003 tax cuts, often
referred to collectively as the “Bush-era tax cuts”;
• the temporary extension of certain tax provisions originally included as part of
the American Recovery and Reinvestment Act (ARRA; P.L. 111-5), often
referred to as the “2009 tax cuts”;
• the permanent extension of the alternative minimum tax (AMT) patch;
• the temporary extension of a variety of other temporary expiring provisions for
individuals, businesses, and energy often referred to as “tax extenders”; and
• the expansion of in-plan conversions of traditional employer-sponsored
retirement accounts (like 401(k) plans) to employer-sponsored Roth accounts
(like Roth 401(k) plans).
ATRA did not extend the payroll tax cut.3 The payroll tax cut—temporarily enacted for 2011 and
2012—reduced the employee’s share of Social Security taxes from 6.2% to 4.2% and from 12.4%
to 10.4% for the self-employed on the first $110,100 of wages in 2012. In addition, P.L. 112-240
did not change another component of the fiscal cliff, namely new taxes primarily related to
Medicare and enacted as part of the Affordable Care Act (ACA; P.L. 111-148 as amended), which
went into effect in the beginning of 2013.4

1 Other tax provisions that were part of the “fiscal cliff”, including the AMT patch and certain “tax extenders”
discussed later in this report, expired at the end of 2011.
2 This legislation was passed by the Senate in the early morning of January 1, 2013, by a vote of 89-8
(http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=112&session=2&vote=00251),
and later that evening in the House by a vote of 257-167 (http://clerk.house.gov/evs/2013/roll659.xml). The president
signed this legislation and it became public law on January 2, 2013.
3 For more information on the payroll tax cut, see CRS Report R42485, An Overview of Tax Provisions Expiring in
2012, by Margot L. Crandall-Hollick, CRS Report R41648, Social Security: Temporary Payroll Tax Reduction, by
Dawn Nuschler and CRS Report R42103, Extending the Temporary Payroll Tax Reduction: A Brief Description and
Economic Analysis, by Donald J. Marples and Molly F. Sherlock.
4 For more information on the Affordable Care Act (ACA) taxes scheduled to go into effect in 2013, see CRS Report
R41128, Health-Related Revenue Provisions in the Patient Protection and Affordable Care Act (ACA), by Janemarie
Mulvey, specifically the section entitled “Provisions Affecting Individuals.”
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An Overview of the Tax Provisions in the American Taxpayer Relief Act of 2012

The Joint Committee on Taxation (JCT) estimates that the tax provisions of the fiscal cliff deal
(Titles I-IV and Title X of P.L. 112-240) would reduce revenues by $3.9 trillion over the 10-year
budgetary window from 2013 to 2022 in comparison to the official current law baseline. (The
official current law baseline used was an estimate of future revenue if all temporary tax
provisions had expired as originally scheduled.)5 Of this $3.9 trillion, $1.5 trillion (39%) is a
result of permanently extending certain income tax provisions of the 2001 and 2003 tax cuts,
$369.1 billion (9%) is a result of permanently extending and modifying estate tax provisions,
$134.2 billion (3%) is a result of temporarily extending 2009 tax cut provisions, $1.8 trillion
(46%) is a result of permanently extending the AMT patch, and $76.3 billion (2%) is a result of
temporarily extending certain temporary expiring provisions and “tax extenders.” ATRA also
would raise an estimated $12.2 billion (less than 1%) over the 2013-2022 budgetary window by
expanding in-plan conversions of certain employer-sponsored tax-deferred retirement plans to
Roth accounts. (These revenue increases were characterized as partially offsetting the two-month
delay of the sequester in 2013.)6 In contrast, using a current policy baseline which estimates
future revenues if all temporary tax provisions (excluding the payroll tax cut) had been extended,
the Administration has stated that these tax provisions would raise revenues by $618 billion.7
For each group of provisions, this report provides a brief legislative history of the provisions, a
summary of the changes made by ATRA, and an overview of the revenue losses associated with
these provisions. A detailed summary table (Table 1) comparing the provisions included in ATRA
to both current law in effect in 2012, and the hypothetical expiration of these changes (i.e.,
reversion to pre-2001 tax law) in 2013 is provided for the 2001, 2003, and 2009 tax cuts. A
summary table of the tax extenders (Table 3) and whether they were extended by ATRA is also
provided.
Prior to the enactment of ATRA, a number of other legislative vehicles attempted to address these
tax issues in the 112th Congress. For an overview of these bills, see CRS Report R42485, An
Overview of Tax Provisions Expiring in 2012, by Margot L. Crandall-Hollick and CRS Report
R42622, An Overview and Comparison of Proposals to Extend the “Bush Tax Cuts”: S. 3412, S.
3413, H.R. 8, by Margot L. Crandall-Hollick.
ATRA includes other non-tax provisions including those related to budget sequestration,
emergency unemployment benefits, and Medicare provisions. These and other policies which are
not related to tax policy are not examined in this report. For an overview of all the provisions of
ATRA, see CRS Report R42884, The “Fiscal Cliff” and the American Taxpayer Relief Act of
2012, coordinated by Mindy R. Levit.

5 For a discussion of budget baselines, see the Budget Baseline Projections section of CRS Report R42362, The Federal
Budget: Issues for FY2013 and Beyond, by Mindy R. Levit.
6 For more information on the sequester, see CRS Report R42884, The “Fiscal Cliff” and the American Taxpayer
Relief Act of 2012, coordinated by Mindy R. Levit.
7 http://www.whitehouse.gov/blog/2013/01/01/american-taxpayer-relief-act-reduces-deficits-737-billion.
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An Overview of the Tax Provisions in the American Taxpayer Relief Act of 2012

Individual Income and Estate Tax Cuts (2001, 2003,
and 2009 Tax Cuts)
Prior to enactment of ATRA, three major groups of tax provisions expired at the end of 2012
(although they were retroactively reinstated for most taxpayers). First among them was a series of
income tax cuts (often referred to collectively as the “Bush-era tax cuts”) that were enacted by the
Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107-16) and the
Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA; P.L. 108-27). In addition,
several tax provisions enacted as part of the American Recovery and Reinvestment Act of 2009
(ARRA; P.L. 111-5), which expanded tax credits for low-wage work, children, and higher
education, were also scheduled to end. These two groups of tax provisions were originally
scheduled to expire at the end of 2010 and were both extended through the end of 2012 by the
Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-
312, henceforth referred to as the 2010 Tax Act). Finally, as at the end of 2012, the estate tax was
scheduled to revert to its pre-2001 levels ($1 million exemption level, top rate of 55%) from the
estate tax levels in the 2010 Tax Act ($5 million exemption level, top rate of 35%).
On January 2, 2013, ATRA permanently extended the Bush-era tax cuts for most taxpayers
retroactively to the beginning of 2013. For certain upper income taxpayers, certain tax provisions
were modified. Specifically, the top marginal tax rate on ordinary income for taxpayers with
taxable income over $400,000 ($450,000 for married joint filers) rose from 35% to 39.6%. For
taxpayers with taxable income over these thresholds, the top tax rates on capital gains and
dividends also rose from 15% to 20%. In addition, ATRA temporarily extended for five years the
ARRA expansions of tax credits for low-wage work, children, and higher education. Finally,
ATRA permanently extended nearly all of the 2010 Tax Act parameters of the estate tax, except
for the top tax rate on taxable estates, which rose from 35% to 40%. The Joint Committee on
Taxation (JCT) estimates the extension of all of these provisions will result in $2.0 trillion of
revenue losses over a 10-year budgetary window (2013-2022).
Legislative History
The Bush-era tax cuts gradually reduced individual income and estate tax liabilities between 2002
and 2010.8 These tax cuts were extended for 2011 and 2012 by the 2010 Tax Act.
Income Tax Provisions Enacted in 2001 and 2003 (The Bush-Era Tax Cuts)
The Bush-era tax cuts lowered income taxes in a variety of ways, including by
• reducing marginal tax rates on ordinary income;9

8 Other laws enacted during the Bush Administration accelerated the implementation of certain provisions of EGTRRA
and JGTRRA or modified provisions in these bills, including the Working Families Tax Relief Act of 2004 (WFTRA;
P.L. 108-311), The Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA; P.L. 109-222) and the Emergency
Economic Stabilization Act of 2008 (EESA; P.L. 110-343).
9 For more information, see CRS Report R41111, Expiration and Extension of the Individual Income Tax Cuts First
Enacted in 2001 and 2003: Background and Analysis, by James M. Bickley. In addition, see
http://www.irs.gov/pub/irs-drop/rp-11-52.pdf and
(continued...)
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An Overview of the Tax Provisions in the American Taxpayer Relief Act of 2012

• reducing long-term capital gains tax rates and the tax rate on dividends;10
• reducing and then repealing income limitations for personal exemptions and
itemized deductions (often referred to as PEP and Pease, respectively);11
• expanding tax credits, including the earned income tax credit (EITC), the child
tax credit, the adoption tax credit, and the dependent care tax credit;12
• reducing the marriage penalty by expanding for married couples the standard
deduction, the 15% tax bracket, and the income phase-out for the EITC;13 and
• modifying education tax incentives, including Coverdell education saving
accounts (ESAs), the student loan interest deduction, and the tax treatment of
certain scholarships and fellowships. The Bush-era tax cuts also created an
exclusion for employer-provided educational assistance.14
Prior to the enactment of P.L. 112-240, all of these income tax provisions were scheduled to
revert to pre-2001 levels. See Table 1.
Estate Tax Provisions of the Bush-Era Tax Cuts
The Bush-era tax cuts also gradually reduced the estate tax between 2002 and 2009, with a full
repeal of the estate tax in 2010.15 The estate tax is a tax on the estate of a decedent, levied against
and paid by the estate.16 Under EGTRRA, the amount of an estate which was exempt from
taxation gradually rose from $1 million per decedent in 2002 to $3.5 million per decedent in
2009, while the top tax rate under the estate tax fell from 55% to 45% over the same time period.
In 2010 there was no federal estate tax.

(...continued)
http://www.taxpolicycenter.org/taxtopics/TCE_CompareRates_2012.cfm.
10 For more information, see CRS Report RS21014, Economic and Revenue Effects of Permanent and Temporary
Capital Gains Tax Cuts, by Jane G. Gravelle and CRS Report RS21541, Tax Treatment of Dividends Under the 2003
Tax Cut: Fact Sheet, by Jane G. Gravelle and CRS Report R41394, Tax Treatment of Long-Term Capital Gains and
Dividends and Related Provisions in the President’s FY2011 Budget Proposal, by Mark P. Keightley.
11 For more information, see CRS Report R41796, Deficit Reduction: The Economic and Tax Revenue Effects of
Personal Exemption Phaseout (PEP) and Limitation on Itemized Deductions (Pease), by Thomas L. Hungerford.
12 For more information, see CRS Report R41873, The Child Tax Credit: Current Law and Legislative History , by
Margot L. Crandall-Hollick, CRS Report RL31768, The Earned Income Tax Credit (EITC): An Overview, by Christine
Scott, CRS Report RL33633, Tax Benefits for Families: Adoption, by Christine Scott and CRS Report RS21466,
Dependent Care: Current Tax Benefits and Legislative Issues, by Christine Scott and Janemarie Mulvey.
13 CRS Report RL30419, The Marriage Tax Penalty: An Overview of the Issues, by Jane G. Gravelle.
14 For more information, see CRS Report R41967, Higher Education Tax Benefits: Brief Overview and Budgetary
Effects, by Margot L. Crandall-Hollick.
15 For more information on the estate tax, see CRS Report 95-444, A History of Federal Estate, Gift, and Generation-
Skipping Taxes, by John R. Luckey and CRS Report RL30600, Estate and Gift Taxes: Economic Issues, by Donald J.
Marples and Jane G. Gravelle.
16 The federal estate and gift taxes are unified. This means that these taxes have the same rate structure. The federal gift
tax is imposed on lifetime gifts of property. For more information the relationship between the estate and gift taxes, see
CRS Report 95-416, Federal Estate, Gift, and Generation-Skipping Taxes: A Description of Current Law, by John R.
Luckey.
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The 2010 Tax Act reinstated the estate tax, but raised the exemption level and lowered the tax rate
in comparison to the estate tax in effect in 2009. Specifically, the exemption amount in 2011 was
set at $5 million per decedent (adjusted for inflation, this amount equaled $5,120,000 per
decedent in 2012) and the top tax rate was set at 35%. Prior to enactment of P.L. 112-240, the
estate tax was scheduled to increase in 2013, with a $1 million per decedent exemption level and
55% top tax rate.
ARRA Tax Provisions (“2009 Tax Cuts”)
The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) made modifications
to two provisions of the Bush-era tax cuts and enacted two new tax provisions. Specifically,
ARRA’s modifications expanded the refundability of the child tax credit and further reduced the
marriage penalty of the EITC. These changes were extended along with the Bush-era tax cuts by
the 2010 Tax Act. In addition, ARRA increased the EITC for families with three or more
children17 and enacted a new higher education tax credit—the American Opportunity Tax Credit
(AOTC)—which replaced the Hope Credit.18 These tax law changes were also extended through
the end of 2012 by the 2010 Tax Act.
Changes Made by ATRA
ATRA permanently extended the income tax provisions of the 2001 and 2003 tax cuts for most
taxpayers. (For a detailed overview of how ATRA extended and modified the 2001 and 2003 tax
cuts, see Table 1.) Specifically, ATRA permanently extended the lower tax rates on ordinary
income and capital gains and dividends for taxpayers with taxable income of $400,000 or less
($450,000 for married taxpayers filing jointly).19 For taxpayers with taxable income above these
thresholds, the marginal tax rate on ordinary income tax rates increased permanently from 35% to
39.6% (effectively creating a new 39.6% bracket) and the top tax rate on capital gains and
dividends permanently increased from 15% to 20%. In addition, ATRA permanently reinstated
PEP and Pease for taxpayers with AGI above $250,000 ($300,000 for married taxpayers filing
jointly).20,21 For taxpayers with AGI below these thresholds, PEP and Pease were permanently
repealed.
ATRA also extended a modified version of the estate tax parameters that were enacted as part of
the 2010 Tax Act. Specifically, ATRA extended the $5 million per decedent exemption amount
(indexed for inflation). But under ATRA, the top tax rate on estates rose from 35% to 40%. ATRA
also extended the gift tax parameters of a $5 million exemption level (indexed for inflation) and a

17 For more information on this change, see CRS Report RS21352, The Earned Income Tax Credit (EITC): Changes for
2011 and 2012, by Christine Scott.
18 For more information on the American Opportunity Tax Credit, see CRS Report R41967, Higher Education Tax
Benefits: Brief Overview and Budgetary Effects, by Margot L. Crandall-Hollick.
19 These new thresholds for the 39.6% bracket will for taxable years after 2013 be adjusted for inflation occurring after
2013.
20 These new thresholds for PEP and Pease will, for taxable years after 2013, be adjusted for inflation occurring after
2013.
21 For information on these provisions see, CRS Report R41796, Deficit Reduction: The Economic and Tax Revenue
Effects of Personal Exemption Phaseout (PEP) and Limitation on Itemized Deductions (Pease), by Thomas L.
Hungerford.
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40% top rate. In addition, ATRA extends portability rules related to the passing of an exemption
amount from a decedent to a surviving spouse.
Finally, ATRA temporarily extended the four ARRA tax provisions related to the child tax credit,
the EITC and the AOTC, for five years, through the end of 2017. For details on all of these
provisions, see Table 1.
Budgetary Cost
According to the JCT, the permanent extension or modification of income and estate tax
provisions originally enacted as part of the 2001, 2003, or 2009 tax cuts is estimated to reduce
revenues by $2.0 trillion over the 10-year budgetary window of 2013-2022 compared to a current
law baseline. Of these revenue losses, $1.5 trillion is attributed to the permanent extension of the
modified income tax provisions included in the 2001 and 2003 tax cuts, $369.1 billion is
attributed to the permanent extension of the modified estate tax, and $134.2 billion is attributed to
the temporary extension of the expansion of certain tax credits included in ARRA.

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Table 1. An Overview of the Individual Income and Estate Tax Provisions of ATRA
in Comparison to the Hypothetical Extension or Expiration of All of These Provisions, 2013
Extension of All Tax Cuts
Expiration of All Tax Cuts
Hypothetical changes in 2013 if all Bush-era tax
ATRA
Hypothetical changes in 2013 if All Bush-era tax
Provision
cuts and ARRA provisions had been extended
P.L. 112-240
cuts and ARRA provisions had expired
Income Tax Provisions (2001 and 2003 Tax Cuts)
10% Tax Bracket
This tax bracket would apply to a portion of
Same as under “Extension of Al Tax Cuts.”
This bracket would have expired and taxable
taxable income that was, prior to the Bush tax
income that was previously subject to the 10%
cuts, subject to the 15% bracket.
This provision is extended permanently.
rate would have been subject to the 15% rate.
For more detail, see Table 2.
For more detail, see Table 2.
Tax Rates in Top Tax Brackets
35% | 33% | 28% | 25% tax brackets
For taxpayers with taxable income above
39.6% | 36% | 31% | 28% tax brackets
$400,000 ($425,000 for head of household
For more detail, see Table 2.
filers and $450,000 for married joint filers), the
For more detail, see Table 2.
top tax rate rises from 35% to 39.6%
For taxpayers with income below these taxable
income thresholds, the top tax rates remain the
same as under “Extension of Al Tax Cuts.”
This modified provision is extended
permanently.
Tax Rates on Capital Gains
The top tax rate for both long-term capital
For taxpayers with taxable income above
The top tax rate for long-term capital gains
and Dividends
gains and qualified dividends would be 15%.
$400,000 ($425,000 for head of household
would have risen to 20% and dividends would
filers and $450,000 for married joint filers), the
have been taxed at ordinary income tax rates.
top tax rate on capital gains and dividends rises
from 15% to 20%.
For taxpayers with income below these taxable
income thresholds, the top tax rates remain the
same as under “Extension of Al Tax Cuts.”
This modified provision is extended
permanently.
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An Overview of the Tax Provisions in the American Taxpayer Relief Act of 2012

Extension of All Tax Cuts
Expiration of All Tax Cuts
Hypothetical changes in 2013 if all Bush-era tax
ATRA
Hypothetical changes in 2013 if All Bush-era tax
Provision
cuts and ARRA provisions had been extended
P.L. 112-240
cuts and ARRA provisions had expired
Limits on Itemized Deductions There would be no income limitations on the
For taxpayers with Adjusted Gross Income
The overall limitation on itemized deductions
(Pease)
overall amount of itemized deductions a
(AGI) over $250,000 ($275,000 for head of
would have been restored. For higher income
taxpayer could claim (i.e., the Pease limitation
household filers and $300,000 for married joint
taxpayers, the total amount of itemized
would be fully repealed).
filers), the total amount of itemized deductions
deductions would have been reduced by 3% of
is reduced by 3% of the amount by which the
the amount by which the taxpayer’s AGI
taxpayer’s AGI exceeds these thresholds,
exceeded an applicable threshold, adjusted
adjusted annual y for inflation. The total amount annually for inflation. The total amount of
of itemized deductions is not to be reduced by
itemized deductions would not have been
more than 80%.
reduced by more than 80%.
For taxpayers with AGI below these
For 2013, the JCT estimates the applicable
thresholds, the Pease limitation is repealed.
Pease threshold would be $177,550.
This modified provision is extended
permanently.
Personal Exemptions Phase-
There would be no overal income restrictions
For taxpayers with AGI over $250,000
The limit on personal exemptions would have
Out (PEP)
on the amount of personal exemptions a
($275,000 for head of household filers and
been restored. For higher income taxpayers,
taxpayer could claim (i.e., the PEP limitation
$300,000 for married joint filers), the total
the total amount of exemptions that could have
would be fully repealed).
amount of exemptions that can be claimed will
been claimed would have been reduced by 2%
be reduced by 2% for each increment of $2,500
for each increment of $2,500 by which the
by which the taxpayer’s AGI exceeds these
taxpayer’s AGI exceeded applicable thresholds,
thresholds, adjusted annual y for inflation.
adjusted annually for inflation.
For taxpayers with AGI below these
For 2013, the JCT estimates the applicable
thresholds, the PEP is repealed.
Pease threshold would be $177,550 for single
This modified provision is extended
filers, $221,950 for head of household filers,
permanently.
and $266,300 for married joint filers.
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An Overview of the Tax Provisions in the American Taxpayer Relief Act of 2012

Extension of All Tax Cuts
Expiration of All Tax Cuts
Hypothetical changes in 2013 if all Bush-era tax
ATRA
Hypothetical changes in 2013 if All Bush-era tax
Provision
cuts and ARRA provisions had been extended
P.L. 112-240
cuts and ARRA provisions had expired
Child Tax Credit
The child credit would be $1,000 per eligible
Same as under “Extension of Al Tax Cuts.”
The child credit would have been $500 per
child.
eligible child.
This provision is extended permanently.
The child tax credit would be partially
The child tax credit would have been non-
refundable using the earned income formula
refundable for most families (the earned
which is equal to 15% of a family’s earnings in
income formula would have expired).
excess of a refundability threshold of $10,000
(indexed for inflation annually).
ARRA Modifications. ARRA lowered the refundability
threshold to $3,000 (not indexed for inflation) for
2009 and 2010. This lower threshold was
extended for 2011 and 2012 by P.L. 111-312.

Adoption Tax Benefits
Eligible taxpayers would be able to claim two
Same as under “Extension of Al Tax Cuts.”
The adoption tax credit would have been
adoption tax benefits, although the combined
available only for special needs adoptions. The
level of qualified expenses would be limited to
This provision is extended permanently.
exclusion for employer provided adoption
$10,000 (indexed for inflation).
assistance would have expired.
In 2012, this limit was $12,650. Specifically, in
The limit for the credit would have been
2012, a taxpayer could either exclude from
reduced to $6,000 (not indexed for inflation).
their income up to $12,650 of employer
provided adoption assistance or claim a tax
The phase-out range for the credit would have
credit of up to $12,650, or a combination of
been $75,000-$115,000 (not indexed for
both tax benefits as long as the combined level
inflation).
of qualified expenses did not exceed $12,650.
Both the tax credit and exclusion phased out
for taxpayers with incomes between $189,710
and $229,710 in 2012 (indexed for annually for
inflation).
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Extension of All Tax Cuts
Expiration of All Tax Cuts
Hypothetical changes in 2013 if all Bush-era tax
ATRA
Hypothetical changes in 2013 if All Bush-era tax
Provision
cuts and ARRA provisions had been extended
P.L. 112-240
cuts and ARRA provisions had expired
Dependent Care Tax Credit
The dependent care credit would be equal to
Same as under “Extension of Al Tax Cuts.”
The dependent care credit would have been
35% of the first $3,000 of eligible expenses for
equal to 30% of the first $2,400 of eligible
one qualifying individual ($6,000 of qualifying
This provision is extended permanently.
expenses for one qualifying individual ($4,800
expenses for two or more eligible individuals).
for two or more qualifying individuals). The
The 35% credit rate would be reduced for
30% credit rate would have been reduced for
incomes above $15,000.
incomes above $10,000.
Standard Deduction for
The deduction for married couples would be
Same as under “Extension of Al Tax Cuts.”
The deduction for married couples would have
Married Couples
200% the deduction for singles
been 167% the deduction for singles.
This provision is extended permanently.
15% Bracket for Married
The upper limit of this bracket would be equal
Same as under “Extension of Al Tax Cuts.”
The upper limit of this bracket would have
Couples
to 200% (i.e., double) the upper limit for
been equal to 167% of the upper limit for
singles.
This provision is extended permanently.
singles.
Earned Income Tax Credit
The income level at which the EITC begins to
Same as under “Extension of Al Tax Cuts.”
The higher phase-out level for married
Marriage Penalty Relief
phase out for married taxpayers in comparison
taxpayers would have expired and their phase-
to unmarried taxpayers would increase.
This provision is extended permanently.
out levels would have been the same as for
Specifically, this phaseout threshold would
unmarried taxpayers.
increase by $3,000 (indexed for inflation) in
comparison to unmarried claimants under
EGTRRA.
ARRA Modifications: ARRA increased the phaseout
threshold for married claimants by $5,000 in
comparison to unmarried claimants (this amount
was indexed for inflation). This modification was
extended for 2011 and 2012 by P.L. 111-312.
Employer Provided Educational Up to $5,250 of qualifying employer provided
Same as under “Extension of Al Tax Cuts.”
The provision would have expired.
Assistance
educational assistance would be excluded from
income and hence not subject to taxation.
This provision is extended permanently.
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Extension of All Tax Cuts
Expiration of All Tax Cuts
Hypothetical changes in 2013 if all Bush-era tax
ATRA
Hypothetical changes in 2013 if All Bush-era tax
Provision
cuts and ARRA provisions had been extended
P.L. 112-240
cuts and ARRA provisions had expired
Student Loan Interest
Up to $2,500 of student loan interest expenses
Same as under “Extension of Al Tax Cuts.”
The deduction could only have been claimed by
Deduction
could be deducted from gross income (as an
eligible taxpayers for the first 60 months (5
above-the-line deduction). The amount that
This provision is extended permanently.
years) of interest payments. In addition, the
could be deducted would phase out for
income phase-out levels would have been
taxpayers with income between $55,000 and
reduced to $40,000-$55,000 ($60,000-$75,000
$70,000 ($110,000 and $140,000 for married
for married joint filers), adjusted for inflation.
joint filers), adjusted for inflation. In 2012, these
The JCT estimates the phase-out ranges would
phaseout ranges were $60,000-$75,000
have been $50,000-$65,000 ($75,000-$90,000
($125,000-$155,000 for married joint filers).
for married joint filers) in 2013.
Coverdel s Education Savings
Coverdell ESAs would be modified in several
Same as under “Extension of Al Tax Cuts.”
These modifications would have expired, hence:
Accounts (ESAs)
ways, including:
(1) The maximum contribution amount for a
(1) The maximum contribution amount for a
This provision is extended permanently.
beneficiary would have been $500 per year
beneficiary would be $2,000 per year
(2) Qualified expenses would have been limited
(2) Qualified expenses would include
to higher education expenses
elementary and secondary school expenses
(3) The phase-out range for married taxpayers
(kindergarten through 12th grade), in addition
would have been $150,000-$160,000, not
to higher education expenses
indexed for inflation
(3) The phase-out range for married taxpayers
(4) Contributions could have been made up
would be $190,000-$220,000, not indexed for
until the beneficiary was 18 years old and all
inflation (double the phase-out range for
distributions would have been required to be
singles)
made when the beneficiary turned 30 for both
(4) Age limitations would be waived for special
non-special needs and special needs
needs beneficiaries
beneficiaries
(5) Beneficiaries who use Coverdells could also
(5) If taxpayers claimed education tax credits
claim education tax credits without penalty
when they take a Coverdell distribution, their
(expenses paid for with Coverdel funds cannot
distribution would have been subject to
be used to claim credits)
taxation
(6) Contributions could be made to both a 529
(6) Contributions made to a Coverdell for a
qualified tuition plan and Coverdell for the
beneficiary would have been subject to a 6%
same beneficiary without penalty.
excise tax if contributions for the same
beneficiary were made to a 529 plan in the
same year.
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Extension of All Tax Cuts
Expiration of All Tax Cuts
Hypothetical changes in 2013 if all Bush-era tax
ATRA
Hypothetical changes in 2013 if All Bush-era tax
Provision
cuts and ARRA provisions had been extended
P.L. 112-240
cuts and ARRA provisions had expired
ARRA Tax Provisions (2009 Tax Cuts)
Refundable Portion of the
The earnings level at which taxpayers could
Same as under “Extension of Al Tax Cuts.”
The refundable child tax credit would be
Child Tax Credit
receive the refundable portion of the child tax
unavailable to most families
credit would be $3,000.
This provision is extended for five years and
hence expires on December 31, 2017.
If the ARRA changes to the refundable portion of
EGTRRA made the child tax credit partially
the child tax credit expired, but the EGTRRA
refundable for taxpayers with earnings over
changes remained in place, the refundable portion
$10,000 (adjusted for inflation). This $10,000
of the child tax credit would be available to
earnings level is referred to as the “refundability
taxpayers with earnings over $10,000 (indexed for
threshold.”
inflation).
ARRA lowered the refundability threshold to $3,000
(not indexed for inflation) for 2009 and 2010. This
lower threshold was extended for 2011 and 2012
by P.L. 111-312.
EITC Marriage Penalty Relief
The income level at which the EITC would
Same as under “Extension of Al Tax Cuts.”
The higher phase-out threshold for married
begin to phase out for married couples (the
taxpayers would expire and their phase-out
“phaseout threshold”) would be $5,000 greater
This provision is extended for five years and
levels would be the same as for unmarried
(indexed for inflation) than the income level at
hence expires on December 31, 2017.
taxpayers.
which the EITC phased out for unmarried
taxpayers.
If the ARRA changes to the EITC phaseout level for
married claimants expired, but the EGTRRA
EGTRRA increased the phaseout threshold for
changes remained in place, the phaseout threshold
married couples by $3,000 (this amount is indexed
for married taxpayers would be $3,000 higher than
for inflation) in comparison to unmarried claimants.
the phaseout threshold for unmarried taxpayers
(this amount is indexed for inflation).
ARRA increased the phaseout threshold for married
claimants by $5,000 in comparison to unmarried
claimants (this amount was indexed for inflation).
This modification was extended for 2011 and 2012
by P.L. 111-312.
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Table 2. Approximate Tax Brackets Under
ATRA in 2013 by Type of Tax Filer
Hypothetical Extension of
ATRA
Hypothetical Expiration of
All Bush-Era Tax Cuts
P.L. 112-240
All Bush-Era Tax Cuts
Single Filers
Taxable Income
Taxable Income
Taxable Income
(over-but not over) Rate (over-but not over) Rate (over-but not over) Rate
$0-$8,900 10% $0-$8,900
10%
$0-$36,150 15%
$8,900-$36,150 15% $8,900-$36,150
15%
$36,150-$87,550 25% $36,150-$87,550
25%
$36,150-$87,550 28%
$87,550-$182,600 28% $87,550-$182,600
28%
$87,550-$182,600 31%
$182,600-$397,000 33% $182,600-$397,000
33%
$182,600-$397,000 36%
$397,000-$400,000 35%
$397,000- 35%
$397,000 39.6%
$400,000- 39.6%
Head of Household Filers
Taxable Income
Taxable Income
Taxable Income
(over-but not over) Rate (over-but not over) Rate (over-but not over) Rate
$0-$12,700 10% $0-$12,700
10%
$0-$48,400 15%
$12,700-$48,400 15% $12,700-$48,400
15%
$48,400-$125,000 25% $48,400-$125,000
25%
$48,400-$125,000 28%
$125,000-$202,450 28% $125,000-$202,450
28%
$125,000-$202,450 31%
$202,450-$397,000 33% $202,450-$397,000
33%
$202,450-$397,000 36%
$397,000-$425,000 35%
$397,000- 35%
$397,000 39.6%
$425,000- 39.6%
Married Joint Filers
Taxable Income
Taxable Income
Taxable Income
(over-but not over) Rate (over-but not over) Rate (over-but not over) Rate
$0-$17,800 10% $0-$17,800
10%
$0-$60,350a 15%
$17,800-$72,300a 15% $17,800-$72,300a 15%
$72,300-$145,900 25% $72,300-$145,900
25%
$60,350-$145,900 28%
$145,900-$222,300 28% $145,900-$222,300
28%
$145,900-$222,300 31%
$222,300-$397,000 33% $222,300-$397,000
33%
$222,300-$397,000 36%
$397,000-$450,000 35%
$397,000- 35%
$397,000 39.6%
$450,000- 39.6%
Source: Joint Committee on Taxation, Description of Revenue Provisions Contained In The President’s Fiscal Year
2013 Budget Proposal, June 18, 2012, JCS-2-12, Tables 5 & 6 and P.L. 112-240, the American Taxpayer Relief Act
of 2012.
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Notes: These brackets are based on estimates of the individual income rate structure in 2013 from the Joint
Committee on Taxation and the statutory levels for the 39.6% bracket as included in P.L. 112-240. Aside from
the 39.6% bracket, the actual brackets for 2013 may differ.
a. For married joint filers, if the Bush-era tax cuts had expired, the top of the 15% bracket would have been
equal to 167% of the top of the 15% bracket for singles. The extension of the Bush-era tax cuts extended the
provision whereby the 15% bracket for married joint filers is 200% the bracket for singles.
AMT Patch
Legislative History
The Alternative Minimum Tax (AMT) was designed to ensure that higher-income taxpayers who
owed little or no taxes under the regular income tax because they could claim tax preferences
would still pay some tax.22 When calculating the AMT, taxpayers first add back various “tax
preference items” (like certain deductions) to their taxable income to determine the amount of
income subject to the AMT (the “AMT tax base”). Second, taxpayers subtract a basic exemption
amount from their AMT tax base. Third, a two-tiered rate structure of 26% and 28% is assessed
against the AMT tax base to determine tax liability. Finally, if a taxpayer’s AMT is greater than
their regular tax liability, the taxpayer pays the difference in addition to their regular tax liability.
Crucially, prior to the enactment of P.L. 112-240, key parts of the AMT—including the exemption
amount—were not indexed for inflation. This meant that an additional 28 million taxpayers
would have been subject to the AMT in 2012 due to the rise of their nominal income levels over
time.23
The Bush-era tax cuts temporarily increased the exemption amount under the AMT. This
temporary increase in the exemption amount, known as the AMT patch, was extended several
more times24 and was in effect through the end of 2011.25 Prior to enactment of ATRA, the AMT
patch had expired for 2012. In 2011, the AMT exemption amounts were $74,450 for married
individuals filing joint returns and $48,450 for unmarried individuals. Before enactment of
ATRA, these exemption amounts would have reverted to $45,000 for married individuals and
$33,750 for unmarried individuals beginning in 2012.26 In addition, past AMT patch legislation
has included a provision allowing taxpayers to reduce their AMT by nonrefundable personal tax
credits.27 Without a patch, most nonrefundable personal credits would have no longer been
allowed against the AMT.

22 For more information on the Alternative Minimum Tax, see CRS Report RL30149, The Alternative Minimum Tax for
Individuals, by Steven Maguire.
23 Tax Policy Center, Table T12-0168, http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=3511&
DocTypeID=7.
24 For more information, see http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=195. In addition, see
CRS Report RL30149, The Alternative Minimum Tax for Individuals, by Steven Maguire.
25 The last AMT patch which was included in P.L. 111-312 retroactively patched the AMT for 2010 as well as patching
it for 2011. During 2012, there was no AMT patch in place, although ATRA subsequently retroactively applied to
2012.
26 See Table 1 of CRS Report RL30149, The Alternative Minimum Tax for Individuals, by Steven Maguire.
27 These credits include the adoption tax credit, the dependent care credit, the credit for the elderly and disabled, the
child credit, the credit for interest on certain home mortgages, the Hope Scholarship and Lifetime Learning credits, the
credit for savers, the credit for certain nonbusiness energy property, the credit for residential energy efficient property,
the credit for certain plug-in electric vehicles, the credit for alternative motor vehicles, the credit for new qualified
(continued...)
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Changes Made by ATRA
ATRA made the AMT patch permanent beginning in 2012. Specifically, ATRA increased the
exemption amount to $50,600 for individuals and $78,750 for married couples filing jointly for
2012 and then permanently adjusted these amounts annually for inflation after 2012.28 It also
permanently allowed non-refundable personal credits to be claimed against the AMT.
Budgetary Cost
According to the Joint Committee on Taxation, the permanent extension of the AMT is estimated
to reduce revenues by $1.8 trillion over the 10-year budgetary window of 2013-2022 compared to
the current law baseline.
Other Expiring Provisions and “Tax Extenders”
Legislative History
In addition to the 2001, 2003, and 2009 tax cuts and the AMT patch, Congress has enacted a
variety of other temporary tax provisions that either expired at the end of 2011 or expired at the
end of 2012 prior to the enactment of ATRA.29 These provisions generally fall into one of six
categories: those related to individuals, businesses, charitable giving, energy, community
development, or disaster relief. Table 3 provides a list of provisions that expired in 2011 or were
scheduled to expire at the end of 2012. In addition, the table includes information as to whether
ATRA extended a particular provision. For more information on the historical cost of certain tax
extenders (including those not extended by ATRA), see Table 2 in CRS Report R42485, An
Overview of Tax Provisions Expiring in 2012, by Margot L. Crandall-Hollick.
Importantly, while most of the provisions that expired in 2011 or were scheduled to expire at the
end of 2012 have been routinely extended on a short-term basis, and are hence commonly
referred to as “tax extenders,” there are a variety of more recently enacted temporary provisions
that have not been previously extended. Both traditional “tax extenders” and these new expiring
provisions are included in Table 3.
Individual
Several temporary tax provisions affecting individuals either expired at the end of 2011 or were
scheduled to expire at the end of 2012. Of these, the largest in terms of estimated revenue losses

(...continued)
plug-in electric drive motor vehicles, and the D.C. first-time homebuyer credit.
28 P.L. 112-240 also adjusts other parameters of the AMT for inflation after 2012, including the tax brackets and the
AMT exemption amount phaseout threshold.
29 Some of temporary tax provisions expire after 2012. A complete list can be found in Joint Committee on Taxation,
List of Expiring Federal Tax Provisions, January 13, 2012, JCX-1-12. In addition, for an overview of laws which have
extended individual provisions, see Table in CRS Report R42105, Tax Provisions Expiring in 2011 and “Tax
Extenders,” by Molly F. Sherlock.
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include the deduction for state and local sales taxes;30 the above-the-line deduction for qualified
tuition and related expenses;31 the deduction of mortgage insurance premiums as qualified
interest; the above-the-line deduction for certain expenses of elementary and secondary school
teachers;32 and the parity in the tax treatment of employer-provided transit benefits to parking
benefits.
Business
Several temporary tax provisions affecting businesses either expired at the end of 2011 or were
scheduled to expire at the end of 2012. Of these, the largest in terms of estimated revenue losses
include bonus depreciation in 2011 and 2012, whereby a 50% bonus depreciation allowance in
effect for 2012 was set to expire after December 31, 2012; the research and experimentation
credit;33 the exception under Subpart F for active financing income earned by banking, financing,
and insurance business operations abroad;34 the enhanced cost-recovery for qualified leasehold,
restaurant, and retail improvements; and the enhanced expensing allowances which allowed
businesses to expense $500,000 in qualified investments in 2011.35
Charitable
Several temporary provisions designed to incentivize charitable giving36 expired at the end of
2011. Of these, the largest in terms of estimated revenue losses was the provision that allowed
tax-free distributions from IRAs for the purposes of charitable donations.
Energy
Several temporary provisions affecting the energy sector, including alternative energy, expired at
the end of 2011 or were scheduled to expire at the end of 2012. These include incentives for
alcohol fuels (primarily ethanol), the Section 1603 grants-in-lieu of tax credit program,37
incentives for biodiesel and renewable diesel;38 the placed-in-construction date for the production

30 For more information, see CRS Report RL32781, Federal Deductibility of State and Local Taxes, by Steven
Maguire.
31 For more information, see CRS Report R41967, Higher Education Tax Benefits: Brief Overview and Budgetary
Effects, by Margot L. Crandall-Hollick.
32 For more information, see CRS Report RS21682, The Tax Deduction for Classroom Expenses of Elementary and
Secondary School Teachers, by Linda Levine (out of print; available upon request from author).
33 For more information, see CRS Report RL31181, Research Tax Credit: Current Law, Legislation in the 112th
Congress, and Policy Issues, by Gary Guenther.
34 For more information, see CRS Report R41852, U.S. International Corporate Taxation: Basic Concepts and Policy
Issues, by Mark P. Keightley.
35 For more information, see CRS Report RL31852, Section 179 and Bonus Depreciation Expensing Allowances:
Current Law, Legislative Proposals in the 112th Congress, and Economic Effects, by Gary Guenther.
36 For more information, see CRS Report RL34608, Tax Issues Relating to Charitable Contributions and
Organizations, by Jane G. Gravelle and Molly F. Sherlock.
37 For more information, see CRS Report R41635, ARRA Section 1603 Grants in Lieu of Tax Credits for Renewable
Energy: Overview, Analysis, and Policy Options, by Phillip Brown and Molly F. Sherlock.
38 For more information, see CRS Report R40110, Biofuels Incentives: A Summary of Federal Programs, by Brent D.
Yacobucci.
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tax credit for wind;39 and the credit for nonbusiness energy property (sometimes referred to as the
“25C credit”).40
Community Development
Several provisions to promote community development expired at the end of 2011. These include
qualified zone academy bonds, which are available to state and local governments for elementary
and secondary school renovation, equipment, teacher training, and course materials; the new
markets tax credit (NMTC), which is designed to promote investment in low-income and
impoverished communities;41 and tax incentives to encourage economic activity in empowerment
zones, and in American Samoa.42
Disaster Relief Provisions
A number of disaster-related tax provisions expired at the end of 2011 or were scheduled to expire
at the end of 2012. They include provisions designed to help redevelopment of the New York
Liberty Zone and the Gulf Opportunity (GO) Zone,43 as well as provisions to provide relief
following the Midwestern storms and Hurricane Ike in 2008.
Changes Made by ATRA
Various temporary expiring provisions and “tax extenders” were extended by ATRA for 2012 (if
they expired at the end of 2011) and 2013. For a detailed overview of whether ATRA extended a
particular provision, including the budgetary cost of the extension, see Table 3. Several
temporary expiring provisions, including certain charitable provisions and energy tax provisions
(like incentives for alcohol fuel), were not extended by ATRA.
Budgetary Cost
According to the Joint Committee on Taxation, the extension of all temporary expiring provisions
and tax extenders through the end of 2013 is estimated to reduce revenues by $76.3 billion over
the 10-year budgetary window of 2013-2022. Of these revenue losses, the largest amount of
revenue losses is attributable to the extension of provisions for businesses ($46.2 billion). The
extension of energy tax extenders is estimated to result in $18.2 billion in revenue losses, while
the extension of expiring provisions for individuals is estimated to result in $12.0 billion in
revenue losses. The Congressional Budget Office (CBO) has estimated extending all expiring
provisions permanently would reduce revenues by $890 billion over a 10-year budgetary window

39 Prior to H.R. 8, qualifying facilities had to be “placed-in-service” to be eligible for the PTC. P.L. 112-240 modified
this requirement so the facility had to be “under construction.”
40 For more information, see CRS Report R42089, Residential Energy Tax Credits: Overview and Analysis, by Margot
L. Crandall-Hollick and Molly F. Sherlock.
41 For more information, see CRS Report RL34402, New Markets Tax Credit: An Introduction, by Donald J. Marples
and Sean Lowry.
42 For more information, see CRS Report R41639, Empowerment Zones, Enterprise Communities, and Renewal
Communities: Comparative Overview and Analysis, by Oscar R. Gonzales and Donald J. Marples.
43 For more information, see CRS Report RS22344, The Gulf Opportunity Zone Act of 2005, by Erika K. Lunder.
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of 2013-2022.44 For details on the revenue losses over the 10-year budgetary window of 2013-
2022 associated with the extension of each provision, see Table 3.

44 Congressional Budget Office, An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022, August
2012, Table 1-5, http://www.cbo.gov/sites/default/files/cbofiles/attachments/08-22-2012-Update_to_Outlook.pdf.
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Table 3. Temporary Tax Provisions & “Tax Extenders” Which Expired in 2011 & 2012
Extend by
10-Year Cost
ATRA
Estimate of
(through
ATRA
Internal Revenue
Dec. 31,
Extension 2013-
Provision Expired
Code Section
2013)
2022*
Individual Provisions
Above-the-Line Deduction for Certain Expenses of Elementary and Secondary School
2011 Sec.
62(a)(2)(D)
YES
$0.4 billion
Teachers
Deduction for State and Local Sales Taxes
2011
Sec. 164(b)(5)
YES
$5.5 billion
Above-the-Line Deduction for Qualified Tuition and Related Expenses
2011
Sec. 222(e)
YES
$1.7 billion
Estate Tax Look-Through for Certain Regulated Investment Company (RIC) Stock
2011 Sec.
2105(d) NO na
Held by Nonresidents
Premiums for Mortgage Insurance Deductible as Qualified Interest
2011
Sec. 163(h)(3)
YES
$1.3 billion
Parity for Exclusion for Employer-Provided Mass Transit and Parking Benefits
2011
Sec. 132(f)
YES
$0.2 billion
Disclosure of Prisoner Return Information to Certain Prison Officials
2011
Sec. 6103(k)(10)
YESa $12
million
Treatment of Military Basic Housing Allowance under Low-Income Housing Credit
2011
Sec. 142(d) YES $37
million
Expansion of Adoption Credit and Adoption Assistance Programsb
2011
Secs. 36C and 137;
Sec. 10909(c) of P.L.
NO na
111-148
Refunds Disregarded in the Administration of Federal Programs and Federally Assisted
2012 Sec.
6409
Programs
YES
c
Credit for Prior Year Minimum Tax Liability Made Refundable After Period of Years
2012
Sec. 53(e)
NO
na
Exclusion of Discharge of Principal Residence Indebtedness from Gross Income for
2012 Sec.
108(a)(1)(E)
Individuals
YES $1.3
billion
Business Provisions
Tax Credit for Research and Experimentation Expenses
2011
Sec. 41(h)(1)(B)
YES
$14.3
Temporary Increase in Limit on Cover-Over of Rum Excise Tax Revenues to Puerto
2011 Sec.
7625(f)
Rico and the Virgin Islands
YES $0.2
billion
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Extend by
10-Year Cost
ATRA
Estimate of
(through
ATRA
Internal Revenue
Dec. 31,
Extension 2013-
Provision Expired
Code Section
2013)
2022*
Increase in Rehabilitation Credit for Structures Located in the GO Zone
2011
Sec. 1400N(h)
NO
na
Increase in Rehabilitation Credit for Areas Damaged by the 2008 Midwestern Storms
2011
Sec. 702 of Division C
of P.L. 110-343
NO na
Tax-Exempt Bond Financing for Areas Damaged by the 2008 Midwestern Storms
2012
Sec. 702 of Division C
of P.L. 110-343
NO na
Tax-Exempt Bond Financing for Areas Damaged by Hurricane Ike in 2008
2012
Sec. 704 of Division C
of P.L. 110-343
NO na
Source: Joint Committee on Taxation, List of Expiring Federal Tax Provisions, January 13, 2012, JCX-1-1, Joint Committee on Taxation, Estimated Revenue Effects of the
Revenue Provisions Contained in an Amendment in the Nature of a Substitute to H.R. 8, the “American Taxpayer Relief Act of 2012” as Passed by the Senate on January 1, 2013.
January 1, 2013. JCX-1-13 and Table 2 in CRS Report R42485, An Overview of Tax Provisions Expiring in 2012, by Margot L. Crandall-Hollick
Notes: * Revenue changes associated with the short-term extension of certain provisions may occur in years after the provision has expired. In order to allow a
comparison of the costs of these tax provisions, the revenue losses which occur over a 10-year budgetary window are provided. For revenue losses for each fiscal year,
see JCX-1-13. In addition to the provisions included in this table, ATRA also created a low income housing credit floor of 9 percent. JCT estimates this will reduce
revenues by $8 million over the 10-year budgetary window of 2013-2022. ATRA also extended the housing allowance exclusions for determining median gross income
for qualified residential rental project exempt facilities.
“na” = a revenue loss estimate of extending the provision is unavailable because the provision was not extended as part of P.L. 112-240.
“—“ = no revenue loss.
a. This provisions was permanently extended.
b. For more information, see CRS Report RL33633, Tax Benefits for Families: Adoption, by Christine Scott.
c. Estimates of S. 3521 indicate that the extension of this provision for one year (2013) would result in less than $10 million of revenue losses over a 10-year period
(2013-2022). A revenue loss estimate for the permanent extension of this provision as included in P.L. 112-240 is not available.
d. The maximum credit would be $1.01 per gal on and would apply to fuel from algae.
e. The placed in service date for the PTC for wind was scheduled to expire at the end of 2012, while the placed in service date for the PTC for other renewable
technologies were generally scheduled to expire at the end of 2013. Prior to ATRA, extensions of the PTC extended the placed-in-service date for eligible
properties. Hence if a wind facility was operating prior to the expiration date, they would be eligible for the credit. The extension of the PTC for wind included a
provision that modified the expiration date for all renewable technologies (including wind) such that qualified facilities will be eligible for the PTC (or the investment
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An Overview of the Tax Provisions in the American Taxpayer Relief Act of 2012

tax credit in lieu of the production tax credit) if the construction—as opposed to the placed in service date—begins prior to the end of 2013. In addition, the
renewable energy production tax credit was also modified to exclude segregate paper from the definition of municipal solid water eligible for the credit.
f.
Algae is considered a qualified feedstock for this tax provisions.
g. JCT estimates the extension of this provision has no revenue effect.

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An Overview of the Tax Provisions in the American Taxpayer Relief Act of 2012

In-Plan Roth Conversions
Legislative History
Many employers offer their employees tax-deferred retirement plans. Specifically, employees
may elect to contribute a portion of their pre-tax compensation (i.e., tax-deductible) to a
retirement plan, such as a 401(k). These contributions are not taxed when the funds are
contributed to the plan or as earnings accrue; rather they are taxed when the employee withdraws
these funds from the retirement account. At that point, the withdrawn funds (referred to as
“distributions”) are included as taxable income and taxed at ordinary income tax rates (not capital
gains rates).
More recently, some employers have begun to offer their employees “Roth contribution
programs,” sometimes called “Roth 401(k)s” (employers may also maintain Roth 403(b) and
Roth 457 plans). Unlike other employer-sponsored plans, these programs allow employees to
elect to contribute some of their post-tax compensation (i.e., not tax-deductible) to an account
called a Roth contribution account.45 Since these contributions are taxed when the funds are
contributed to the Roth plan, they are generally46 not taxed when the employee withdraws these
funds from the plan.
At the end of 2010, Congress enacted the Small Business Jobs Act (P.L. 111-240), which
permitted in-plan Roth rollovers from retirement plan funds (i.e., money in traditional 401(k),
403(b), and 457 plans) that were eligible for distribution to a designated Roth contribution
program in the same plan, like a “Roth 401(k).”47 Importantly, according to this 2010 law, funds
eligible for the “in-Plan Roth rollover” had to be otherwise eligible to be withdrawn or
“distributable” under the retirement plan. Generally, “distributable” funds from a retirement plan
refer to the employees’ vested balance once they reach 59 ½ years of age or the designated
retirement age for that plan.48 In other words, as a result of the changes included in P.L. 111-240,
employees who had reached 59 ½ years old could elect to roll over their vested balance from their
401(k) plan to a Roth 401(k), but other employees would not necessarily be eligible for these
conversions.49 When the rollover occurred, the funds which were rolled over—and were not

45 Unlike a Roth-IRA account, which can be established by any individual who works, a Roth 401(k), Roth 403(b), and
Roth 457 accounts are established by an employer who maintains a traditional 401(k), 403(b), 457 account. In addition,
while Roth-IRAs are available only to taxpayers with adjusted gross incomes below a certain level, Roth contribution
programs are available to any employee, regardless of income level, who is a participant in a 401(k) or 403(b) plan that
allows Roth deferrals. For more information on Roth IRAs, see CRS Report RL34397, Traditional and Roth Individual
Retirement Accounts (IRAs): A Primer, by John J. Topoleski.
46 In order for a withdrawal to qualify for tax-free status, it must fulfill two requirements: it must be made after the five-
taxable year period beginning with the first taxable year for which the individual made a contribution to a Roth IRA
and (2) it must be made after the beneficiary reaches 59 ½, or is made on account of death or disability or is made for
first-time homebuyer expenses of up to $10,000.
47 IRC § 402A(c)(4). For more information, see IRS Notice 2010-84, at http://www.irs.gov/irb/2010-51_IRB/ar11.html;
Joint Committee on Taxation, Technical Explanation of the Tax provisions in Senate Amendment 4594 to H.R. 5297,
the “Small Business Jobs Act of 2010,” Scheduled for Consideration by the Senate on September 16, 2010. September
16, 2010, JCX-47-10, p. 42.
48 See, for example, IRS Notice 2010-84 at http://www.irs.gov/irb/2010-51_IRB/ar11.html; Rev. Rul. 2004-12, 2004-1
C.B. 478 at http://www.irs.gov/irb/2004-07_IRB/ar08.html.
49 A retirement plan would have to allow contributors to designate contributions as Roth contributions.
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An Overview of the Tax Provisions in the American Taxpayer Relief Act of 2012

previously subject to tax—would be subject to income tax, generating revenue at the time of the
conversion. However, when the funds were ultimately withdrawn from the Roth contribution
program, they would no longer be subject to tax. Tax revenue is thus collected earlier than if the
conversion were not allowed.
Changes Made by ATRA
P.L. 112-240 expanded the changes made by P.L. 111-240 to allow virtually all traditional 401(k),
403(b), and 457 plan account balances to be transferred to Roth Contribution programs,50
effectively removing the requirement that funds from these accounts be otherwise
“distributable.”51,52 As discussed, prior to ATRA only funds from retirement accounts that could
be withdrawn—generally the vested balance once the employee had reached retirement age—
could be converted into a Roth contribution plan. The change included in Title X of P.L. 112-240
raises revenue over the next 10 years by collecting taxes on the money converted from traditional
401(k) (or 403(b) or 457 plan) accounts to Roth 401(k) (or 403(b) or 457) plans.
When an employee ultimately withdraws the funds from a Roth contribution plan, the distribution
will be tax-free. Hence, by electing to convert a non-Roth account to a Roth account, an
employee will pay tax at the time the funds are rolled over or converted, which will raise
revenues for the federal government at the time the roll-over or conversion occurs. If the funds
were not converted, but remained in the tax-deferred retirement account, taxes would be collected
in later years when the funds were actually withdrawn. Hence, this provision effectively shifts the
timing of tax payments, raising more revenue in the short run and less revenue in the long run.
Budgetary Cost
Title X of P.L. 112-240 raises $12.2 billion in revenue over the 10-year budgetary window of
FY2013-FY2022 (revenue losses occur outside the budget window). These funds were
characterized as partially offsetting a $24 billion reduction in automatic spending cuts (sequester)
scheduled to occur in FY2013. For more information about the sequester and P.L. 112-240, see
CRS Report R42884, The “Fiscal Cliff” and the American Taxpayer Relief Act of 2012,
coordinated by Mindy R. Levit.
Author Contact Information
Margot L. Crandall-Hollick
Analyst in Public Finance
mcrandallhollick@crs.loc.gov, 7-7582

50 This provision also is applicable to conversion of funds in the Thrift Savings Plan (TSP) to a Roth –TSP.
51 According to recent reports, this may greatly increase the amount of money in traditional employer-sponsored
retirement plans that can be converted into Roth plans. See Ashlea Ebeling, “Roth 401(k) Conversions for All Thanks
To Fiscal Cliff Deal,” Forbes, January 2, 2013
52 For both the TSP and the other retirement accounts, this provision allows them to offer participants the option to
convert; it does not require the plan to have the option.
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