President Obama has proposed raising the top 2 tax brackets which affects most higher income americans who make more than $250,000. According to this proposal the 35% top tax rate on income would increase to 39.6%, and the 33% tax rate would rise to 36%. Included in the proposal are new limits on itemized deductions.

As to long-term capital gain which is currently at 15% the propsoal includies changes as follows: the top rate on long-term capital gains, dividends would rise to 20% from 15%. According to President Obama most of these changes would affect upper-income Americans, described as families making more than $250,000.

Previously new laws were passed to phase out estate taxes over several years. In 2010 estate taxes would have been eliminated but as part of this new tax proposal there will be changes made to this new law. As proposed the federal estate-tax changes going into effect in 2010 would change as follows: the basic federal estate-tax exemption is $3.5 million, and the top rate is 45%, excluding transfers between spouses which are tax-free. Currently estate taxes are to be eliminated for 2010 however, president's plan would extend the $3.5 million estate-tax exemption level into future years, therefore would cancel out laws that were put in place to eliminate the the estate taxes. These taxes will only be eliminated for the year 2010.