3 . 8% SU RT. AX IMPACTS THOSE WITH INVESTMENT INCOME TAX RATES ON DIVIDENDS AND LONG-TERM AND AN ADJUSTED GROSS INCOME OF: CAPITAL GAINS WILL RISE ON INVESTMENT f a 188% INCOME The outcome of the “fiscal cliff” is °200,000+ 5250,000+ 15% unknown; the 3.8% surtax On investMeMt eee eee e cece eee eee eee e ee eeeeeeueeeeeeuueeeeeuueeeeeuueeeeeeuereeeeeuereseeeeeseeeeeesseseeeseeeeeees income is a sure thing.’ ‘Investment income subject to the surtax includes interest, dividends, royalties, rents, and capital gains. THE FISCAL BUSH TAX CUTS? The Bush tax cuts are ALL set to expire ESTATE TAX PARAMETERS REVERT e . CLIFF: WHERE December 20% TO PRE-2001 LEVELS D Y FALL? a ee The exemption level falls from $5 million to e $1 million and the top rate on taxable estates INCOME TAX RATES WILL RISE rises fram 35% to 55%, If lawmakers fail to act before January 1, 2013 and address the pending “fiscal cliff,” 15% 28% 31% 36% 39.6% Exemption level $7 trillion worth of tax increases and spending cuts will go into effect. While t t t t t the entire scenario is larger than what's 102% 15% 25% 33% 35.0% Tax rates pictured here, these are some key impacts to the average American: CAPITAL GAINS RATE INCREASES EXPANSION OF ELIGIBILITY FOR THE AMT PATCH2 sli EARNED INCOME TAX CREDIT EXPIRES 5%) o> iJ @ @ e WILL NOT BE RENEWED | x x ¥ Income exempt from the Alternative Minimum Tax in 2012, filed in 2013, decreases (with exemption amounts adjusted for inflation). QUALIFIED DIVIDEND RATE RISES TO e ONE'S TOP INCOME TAX RATE MARRIAGE PENALTY RELIEF EXPIRES ee 7 7 . up from 15% = Low: or middle-income two- for most filers earner couple will owe more 0 550,600 578,750 15 % to the IRS than they would if they were single making the + + same income. hi brie 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 ftinttine OO ge ‘tee «ofeeneeetth A eT KS toa zon=am SPREE 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. FREE/713009999/PH&Params=ltemnr=9 Principal Funds, Inc. is distributed by Principal Funds Distributor, inc., member of the Principal Financial Group®. 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” Funds 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 | 08/2012 | t12091302d2 EFTA00306824