April 2, 2012 -- intro: Congress crossed one item off its tax to-do list last week after passing an extension to the highway excise taxes, which funds transportation projects and without which all federal highway projects would have come to a screeching halt last weekend.
One down, 47 more to go.
If Congress does not act by the end of the year, nearly 50 items in the tax code will expire, sparking tax hikes for nearly every income-earner in America.
"All the tax rates for virtually every taxpayer will go up," said George Yin, the former chief of staff at Congress' Joint Committee on Taxation. "In terms of [Americans] planning and thinking about their lives next year, all of these things would potentially have an impact."
Here's a look at a few ways federal taxes are set to increase unless Congress intervenes.
quicklist: 1title: Income Taxtext: On Dec. 31, one of the most extensive tax cuts in a generation -- the Bush tax cuts -- are set to expire.
If they are not extended -- as they were for two years in 2010 -- about 60 percent of tax filers would see their income tax rate increase between 3 and 5 percentage points, meaning a couple that makes $90,000 per year would pay an extra $2,700 in federal income taxes.
Some taxpayers would lose an additional $500 when the child tax credit, which was doubled to $1,000 under the Bush tax cuts, slides back to a $500 credit per child under the age of 17.
Luckily for the majority of taxpayers, both parties have said they want to extend at least part of the Bush tax cuts. Republicans are aiming for a full extension while Democrats are trying to extend them only for families that earn less than $250,000, or about 98 percent of the population.
"The odds are that Congress will take action to prevent most of the scheduled tax increases," Yin said.
But, Yin added, just how much of the tax cuts will still be around this time next year is "partly of function of who's in office, who wins the election, and partly a function of the current budgetary cost the economic situation."
quicklist: 2title: Investment Income text: Another big portion of the expiring Bush tax cuts are reductions on investment income. If the current rates expire, the tax rate for capital gains would increase from 15 percent to 20 percent and dividends would be taxed as normal income, instead of the current 15-percent rate.
With investment taxes possibly going up, Roberton Williams, a senior fellow at the Urban-Brookings Tax Policy Center, suggested that investors might want to make some changes.
"If you want to sell an asset and have a capital gain, you're better to sell it this year than next year because the capital gains tax will be higher next year if tax laws play out as they currently stand," Williams said.
The opposite is true for giving money away. Williams said people may want to wait until next year to give away large sums of money "because the benefit from the deduction is greater if your tax rate is higher," which it could be if the Bush tax cuts are allowed to expire.
quicklist: 3title: Payroll Taxtext: While the last fight over extending the payroll tax holiday ended a mere month ago, Congress will have to jump back into the ring again before the end of the year if it wants to prevent a 2 percentage point tax increase on 160 million workers.
The 2 point reduction in payroll taxes, which fund Social Security and Medicare, was originally passed in 2011 as a one-year tax break. It was extended through 2012, but with a hefty $143 billion price tag, the payroll tax holiday is a prime target for budget-conscious congressmen.
quicklist: 4title: Likely Outcometext: With the presidential election looming barely more than a month before these major tax breaks are set to expire, any compromises Congress strikes are likely to come down to the wire.
But with the economy still in a relatively fragile recovery, Andrew Moylan, the vice president of government affairs for the National Taxpayers Union, said he "wouldn't bet that everyone's taxes are going to go up."
"There is pretty broad agreement about extending most of the Bush tax cuts," Moylan said. "But the real question is whether Congress is going to extend the lower payroll tax."
Williams, from the Tax Policy Center, said the fate of taxes are about as predictable as the fate of the presidential election.
"I think all bets are off with regards to what this Congress is going to do," he said.