Last fall we saw Congress extend the Bush tax cuts through 2012. This extension provides for the same Capital Gains tax rates and ordinary income tax rates that we have used for the last several years and extends or maintains popular deductions and credits such as the deduction for teacher’s supplies, some college tuition expenses, and child tax credits that were scheduled to expire last December.

In addition, the Alternative Minimum Tax exemption for 2011 was set slightly above the 2010 amount so that we can comfortably predict who will be impacted by AMT in advance this year.

That’s all good, and taxpayers of all stripes will benefit from this legislation. The not so good news is that some of these provisions (example: AMT) were extended just ONE YEAR. Most of the rest were extended only TWO YEARS.

What this means is that next fall we will be wondering what the AMT tax will be for 2012 until Congress acts, and sometime in 2012 – think election year again – we will be looking at this Congress to pass another major tax law. If 2010 was any example, our representatives will not have the temerity to do so before the November elections, creating a scenario like the one we just experienced.

If there is no 2012 tax legislation, we will default back to the 2001 rules that were looming over taxpayers last fall, which will raise taxes significantly on everyone.