What should we expect in the near term with the new administration taking over?  With the economy faltering it is being whispered that many tax increases will be delayed until 2010.  So even high income taxpayers will not be hit with a tax increase until then.  In 2009 it is expected that the following programs will be pushed through congress: increasing the earned income credit and making child care a dependent credits refundable.  If seniors make less than $50,000 per year they may be exempt from income tax.  Instead of a rebate credit like last year, a payroll tax credit which will increase an employee's net check might take hold. This would give workers more money faster than waiting for their rebate checks.

Since Congress can't make up their mind on what to do with the estate tax, the estate tax rates might be frozen for another year at the 2009 levels.

In 2010 and 2011 high income taxpayers will probably see an increase in their income tax.  Federal income tax rates will be increased to 39.6% (from 35%) for married taxpayers over $250,000 in income.  Also it has been rumored that payroll taxes will increase for that group also in 2010.  Maximum rate on capital gains will also increase to 20% (from 15%).

As for businesses, shareholders of Sub S Corps may have to pay social security tax on income distributions.  Currently Sub S owners are not liable for social security tax on this type of distributions.  There may also be a requirement for small businesses to offer payroll deduction IRAs.