This report discusses a number of tax provisions either expired in 2011 or schedule to expire at the end of 2012. These include the Bush tax cuts; the alternative minimum tax (AMT) patch; the temporary payroll tax cut; and other temporary expiring provisions, many of which are commonly referred to as "tax extenders." This report provides an overview of these expiring provisions. For each provision (or group of provisions), this report first describes the provision, then outlines its past cost and the cost of its extension, and concludes with a brief discussion of the current debate concerning the policy. In the case of the Bush tax cuts and tax extenders, the details of the provisions are provided in accompanying tables. This is a print on demand report.

A number of tax provisions either expired in 2011 or are scheduled to expire at the end of 2012. These include the following: The Bush tax cuts, which reduced income taxes by reducing tax rates, reducing the marriage penalty, repealing limitations on personal exemptions and itemized deductions (PEP and Pease, respectively), expanding refundable credits, and modifying education tax incentives. The Bush tax cuts also reduced estate tax liabilities by increasing the amount of an estate exempt from taxation and by lowering the tax rate; The alternative minimum tax (AMT) patch, which, by increasing the amount of income that is exempt from the AMT and allowing certain personal credits against the AMT, prevents an estimated 26 million additional taxpayers from owing the AMT; The payroll tax cut, which reduced an employee's share of Social Security taxes by two percentage points; A variety of previously extended temporary tax provisions, commonly referred to as “tax extenders,” which affect individuals, businesses, charitable giving, energy, community development, and disaster relief. As Congress decides whether to extend these provisions, it may consider the estimated revenue losses associated with their extension. The Congressional Budget Office (CBO) estimated that extending these provisions through 2022, except for the payroll tax cut, which CBO assumes expires as scheduled at the end of 2012, would reduce revenues by $5.4 trillion between 2013 and 2022. Specifically, over this 10-year budgetary window extending the Bush tax cuts and extending the AMT patch would reduce revenues by $4.6 trillion, while extending the tax extenders would reduce revenues by $839 billion. The cost of extending the payroll tax cut for one year (2012) was estimated to be $114 billion over the 2012-2022 budgetary window. In addition to budgetary cost, Congress may also consider other factors when evaluating tax policy. For example, when considering extending the Bush tax cuts, policy makers might consider that the majority of the benefits of this policy accrued to the top 20% of taxpayers. They might also evaluate the potential contractionary impact the expiration of these cuts in 2013 may have on the economy, especially since both the scheduled expiration of the payroll tax cut and the enactment of budget cuts as part of the Budget Control Act (P.L. 112-25) are scheduled to go into effect at the same time. Similarly, Congress may examine the cost effectiveness of the payroll tax cut. According to CBO, the short-term stimulus impact of the payroll tax cut is lower than increasing aid to the unemployed or providing additional refundable tax credits to low- and middle-income households, but more stimulative than extending the Bush tax cuts. Finally, Congress may weigh the lower budgetary costs of short-term extensions of tax extenders against the unpredictability for taxpayers that can arise from short-term extensions. In past years, Congress has extended expiring provisions en masse in one legislative vehicle. In the 112th Congress, Members have considered legislation to extend certain provisions, including S. 3412, S. 3413, and H.R. 8, which extend some or all of the Bush tax cuts and the AMT patch. In addition, the Senate may consider S. 3521, which extends certain temporary expiring provisions.

A number of tax provisions have either expired in 2011 or are scheduled to expire at the end of this FY 2012. These include the Bush tax cuts, the alternative minimum tax (AMT) patch, the temporary payroll tax cut, and other temporary expiring provisions, many of which are commonly referred to as "tax extenders." Aside from the payroll tax cut, which was extended by the Middle Class Tax Relief and Job Creation Act of 2012, the most recent law extending many of these provisions was the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. This book provides an overview of these expiring provisions with a focus on past cost and cost of extension and a brief discussion of the current debate concerning the policy.

On 31 December 2012, a variety of temporary tax provisions that were part of the "fiscal cliff" expired. Two days later, the American Taxpayer Relief Act of 2012 (ATRA) retroactively extended, and in certain cases modified, many of these provisions. The short 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. This book provides an overview of the tax provisions included in the "fiscal cliff deal", including: the permanent extension and modification of the 2001 and 2003 tax cuts ("Bush-era tax cuts"); the temporary extension of certain tax provisions originally included as part of the American Recovery and Reinvestment Act (ARRA); 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.