EFTA00306824.pdf

IMPACTS THOSE WITH INVESTMENT INCOME TAX RATES ON DIVIDENDS AND LONG-TERM 3.8% SURTAX AND AN ADJUSTED GROSS INCOME OF: CAPITAL GAINS WILL RISE • ON INVESTMENT • • 18.8% INCOME The outcome of the "fiscal cliff" is s200,000+ s250,000+ 15% unknown; the 3.8% surtax on investment income is a sure thing: 'Investment income subject to the surtax includes 'merest, dividends, royaltces, rents, and capft BUSH TAX CUTS' THE FISCAL The Bush tax cuts are ALL set to expire ESTATE TAX PARAMETERS REVERT CLIFF: WHERE December 31.2012. TO PRE-2001 LEVELS The exemption level falls from SS million to DO YOU FALL? INCOME TAX RATES WILL RISE St million and the top rate on taxable estates rises from 35% to 55%. If lawmakers fail to act before January 1, i 2013 and address the pending "fiscal cliff," 15% 28% 31% 36% 39.6% Exemption level 5M 55% $7 trillion worth of tax increases and spending cuts will go into effect. While * * * * * the entire scenario is larger than what's 10% 15% 25% 33% 35.0% Tax rates 35% 1M pictured here, these are some key impacts to the average American: CAPITAL GAINS RATE INCREASES EXPANSION OF ELIGIBILITY FOR THE FOR MOST FILERS EARNED INCOME TAX CREDIT EXPIRES AMT PATCH, WILL NOT BE RENEWED income exempt from the Alternative Minimum Tax in 2012, filed in 2013, decreases (with exemption amounts adjusted for inflation). QUALIFIED DIVIDEND RATE RISES TO ONE'S TOP INCOME TAX RATE MARRIAGE PENALTY RELIEF EXPIRES If 550,600 578,750 up from 15% for most filers 15% ••sil LOW- or middle-income two- earner couple will owe more to the IRS than they would if they were single making the • • same income. 533,750 545,000 PEP/PEASE LIMITATIONS RESTORED CHILD TAX CREDIT DECREASES AND RESULTS IN 30+ MILLION PEOPLE HIT BY High-income households may not be able to THE REFUNDABLE PORTION REDUCED THE "WEALTH" TAX take some itemized deductions and personal exemptions in full. itittittitt .P1 * • flit ititttittri w $1,000/child 5500/child 2011=4M WWWWWWWITT 2012 = 30+ M Note: a bipartisan bill from the Senate Finance Committee proposes a patch for 2012 and 2013 ' Investment News, "Nine Issues Driving the Fiscal Cliff," but it has not passed the Senate or House yet. FREW I3009999/PH6tParams= Itemnr=9 Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc., member of the Principal Financial Croup'. Principal Funds Distributor, Principal Shareholder Services, Principal Management Corporation and its affiliates, and Principal Funds, Inc. are collectively referred to as Principal Funds. While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal' are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. WE'LL GIVE YOU AN EDGE' MM5925 1 08/2012 I t1209I302d2 EFTA00306824