The extension of 2010 Tax Relief Act was quietly helpful for several individual taxpayers and businesses, providing payroll tax cut, and making the estate tax at 35% top rate temporarily. Below are the extended law provisions.

•    Tax rates for individual – This new tax relief extends the 35% individual top tax rates for the next two years. Meaning, it will last until 2012 tax year.

•    Credits on Higher Education – The expiration of American Opportunity Tax Credit (AOTC) was scheduled after 2010, but due to this changes the law extends it until 2012 and the AOTC maximum amount remains at $2,500, but for high income taxpayers this rule was phased out.

•    Capital Gains and Dividends – This law also maintains long-term capital gains and qualified dividends at 15% (0% for low income taxpayers) until 2012.

•    Tax Cut for Payroll – Normally, employees have to pay a 6.2% social security tax on their wages up to their annual base ($106,800 for 2011). Thanks for the new law, because it reduces the employees tax to 4.2% for 2011. And for self-employed individual who pays of 12.4% tax, now, they had to pay a 10.4% tax on their self-employed income up to $106.800.

•    Tax relief for Estate – After a one year repeal  of estate tax relief, the law for federal estate tax was about to return in 2011 with a maximum of 55% top rate and $1 million exclusion amount. The 2010 Tax Relief Act enacted a $5 million gift tax exemption per person and a 35% estate tax top rate for 2010 through 2012.

•    Itemized deductions and Personal exemptions – This law was repealed for high income taxpayers, but scheduled to return in 2011. However, the new law makes the repeal extended until 2012.