While tax experts are divided on the immediate future of tax rates as we approach the fiscal cliff (the combination of scheduled tax rate increases and spending cuts by the government), the consensus is that rates will indeed rise precipitously.
If nothing is done legislatively before the end of the year, capital gains rates will increase from 15 to 20 percent, and dividends will be taxed at up to 39.6 percent instead of 15 percent. And the $5.12 million ($10.24 million for couples) that can currently be transferred free of gift or estate tax will drop to $1 million, along with a rise in the top estate tax rate to 55 percent.
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