As the tax deadline approaches, it is important to be cognizant of tax changes that have occurred for 2013.  Here’s an overview of differences between 2012 and 2013.

• Social Security Payroll Taxes: The employee share of social security taxes has been increased to 6.2 percent from the 4.2 percent that was withheld in 2012 from payroll checks. The social security wage base for 2013 is $113,700.
• Medicare Payroll Taxes: The Medicare tax rate is 1.45 percent with no limit to the amount of wages subject to the tax. New for 2013, an employer must withhold additional Medicare tax of .9 percent from wages it pays to an individual in excess of $200,000, in a calendar year, without regard to the individual’s filing status or wages paid by another employer.
• Medicare Surtax: Beginning in 2013, high-income households will start paying a 3.8 percent Medicare surtax on at least a portion of their net investment income such as realized capital gains, dividends, interest, rents and royalties, along with other passive income. The surtax will apply to the lesser of net investment income or the amount by which modified adjusted gross income exceeds $200,000 for individuals or $250,000 for married taxpayers.
• Itemized Deductions and Personal Exemptions: Itemized deductions and personal exemptions will be limited for adjusted gross incomes over $250,000 for individuals or $300,000 for married couples. The calculations are complex, but it is estimated that the phase-outs will effectively increase marginal tax rates for affected taxpayers by 1–1.5 percent.
• Capital Gains: For tax years beginning after 2012, the top rate for long-term capital gains and qualified dividends will be increased to 20 percent from the previous 15 percent for married taxpayers with incomes exceeding $450,000 or single taxpayers with incomes exceeding $400,000. Taxpayers whose income is below those thresholds will be eligible for the 15 percent rate.
• Federal Estate and Gift Taxes:  The federal estate-tax exclusion now is set permanently at $5 million and is indexed for inflation. The top federal estate-tax rate on the largest estates is now 40 percent, up from 35 percent in 2012. The annual gift tax exclusion has been increased to $14,000, from $13,000.
• Qualified Charitable Distributions from an IRA to a Charity: In 2013, individuals over 70.5 years of age can contribute up to $100,000 directly from their IRA to a charity without the distribution being treated as taxable income by the IRS. Additionally, if these distributions are made by February 1, 2013, they can be counted for the 2012 tax year.

• Income Tax Rates: For tax years beginning after 2012, there will be a new 39.6 percent income tax rate for individuals with taxable income above $400,000 or married taxpayers with taxable income above $450,000. Tax brackets for taxable income below those amounts will remain the same as they were in 2012.
• Medical Expense Itemized Deduction: In 2013, the 7.5 percent income threshold for deducting unreimbursed medical expenses increases to 10 percent for taxpayers under age 65. Those 65 and older may continue to use the 7.5 percent threshold through the year 2016.

The changes listed above are not all of the new tax changes for 2013, but they are some of the most widely discussed. These changes may impact you in 2013 and beyond. Be sure to speak to your tax professional to appropriately analyze your taxes and plan accordingly.