On January 2, 2013, the last day of the 112^th Congress, President Obama signed the American Taxpayer Relief Act of 2012 (H.R. 8), the “fiscal cliff bill.”[1]  After multiple rounds of negotiations and political theater throughout the lame duck session, the bill passed the U.S. House of Representatives and the Senate the previous day by votes of 257 to 167 in the House and 89 to 8 in the Senate.

The bill extends multiple tax cuts and credits, summarized below, and delays sequestration – the 8% across-the-board funding cuts that were set to go into effect on January 2, 2013 – until March 1, 2013.  Additionally, fiscal year (FY) 2013 total discretionary budget caps were decreased, though it remains unclear how this will impact final FY 2013 appropriations amounts, particularly for teen pregnancy-, HIV/AIDS-, and STD-prevention programs.

Summary of tax-related components of H.R. 8:

• Permanent extension of the Bush-era tax cuts for those earning less than $400,000, for individuals, and for couples earning less than $450,000. Tax rates will rise on income over those levels.
• Increased tax rates on capital gains, dividends, and the estate tax, as well a permanent extension of the alternative minimum tax. 
• Extension of unemployment benefits and Medicare provider reimbursement rates (the “Doc-Fix”) for one year.
• Extension of the child tax credit, earned income tax credit, and tuition tax credit for five years.
• Extension of FY 2013 federal farm programs, including dairy policies in order to prevent an increase in milk prices. 
• Modifications to funding for the Affordable Care Act (ACA), including a retraction of $1.9 billion in loans to states to create Consumer Oriented and Operated Plans (CO-OPs) and a repeal of the Community Living Assistance Services and Support program (CLASS) Act, a public, long-term care insurance option. [2]

The “fiscal cliff bill” did not address the $1.2 trillion over ten years in savings that is necessary to avoid sequestration and avoid another round of negotiations related to raising the national debt limit. The 113^th Congress, sworn in on January 3, 2013, will need to address both of these, as well as pass FY 2013 appropriations for the remaining six-months of the fiscal year, all within the first three months of the year.