Taxes will be increasing in 2011 at every level for individuals.

Only action by the U.S. Congress extending the Bush tax cuts passed in 2001 and 2003 during the George W. Bush Administration can prevent those hikes, which could increase to a maximum of nearly 40 percent, according to a letter to senators written by Susan Eckerly, senior vice president of public policy for the National Federation of Independent Business.

Basically, if the Bush tax cuts do expire, if nothing is done, it will mean higher tax rates for everybody, said Jeffrey Rambach, an attorney with Doerner, Saunders, Daniel & Anderson law firm. Some have been led to believe only those in the top two brackets will face higher taxes if the current program ends.

“That simply is not true,” he said. “The six tax brackets now in place will be replaced by five higher brackets. Everyone will be affected. It will have a negative impact on an already weak economy.”

Increases reach beyond the income tax bracket most familiar to many Americans.

There also will be higher capital gains and dividend taxes for everyone, Rambach said. Currently, the maximum federal rate on long-term capital gain is at 15 percent. If the cuts expire, the maximum rate for long-term capital gains increases to 20 percent. The maximum rate on dividends might move from 15 percent to rates ranging between 15 and 39.6 percent.

President Barack Obama has said he wants to take action to limit dividend rates to 20 percent. He also has made proposals about personal income taxes.

Individuals in the lowest two tax rate brackets of 10 and 15 percent currently do not pay taxes on dividends and capital gains. Next year that could change to 10 percent on long-term capital gains and between 15 and 28 percent on dividends.

“That shows clearly that taxes are going up for everyone, not just wealthy individuals,” he said.

The list of expiring provisions is really long. Phase-out rules also are changing.

Because of the phase-out rules, higher income individuals basically could lose up to 80 percent of their itemized deductions for mortgage interest, state and local taxes, and charitable contributions. Under the Bush tax cuts, the phase-out rule was gradually eliminated, and last year there was no phase-out. Next year, unless Congress does something, the phase-out will be back in full force.

That means, Rambach said, that if someone married and filing jointly itemizes deductions and has a adjusted gross income above $170,000, or $85,000 if married and filing separately, he or she cannot utilize all of the itemized deductions.

For someone whose AGI is at a certain level, up to 80 percent of his or her itemized deductions would be lost. They couldn’t be claimed. The Bush tax cuts gradually eliminated that requirement. Last year, even people with high adjusted gross incomes were able to utilize their itemized deductions. That’s one point that clearly tilts in favor of the wealthy.

Rambach agreed that without the ability to take tax deductions, contributions to churches and charitable groups are in effect being discouraged. If they have a mortgage, they pay interest whether they want to or not. The same is true with state and local property taxes.

People want to be benevolent, but they also appreciate a tax deduction. There already are enough rules on how much can be currently deducted charitable contributions, but when other rules are added, it hurts charitable donations.

Even though these rules applied to individuals with an AGI in excess of $170,000, when two parents are both working white collar jobs, they aren’t wealthy but have substantial jobs.

If the tax cuts expire, the marriage penalty also will return, Rambach said. Current deductions for married, joint-filing couples is double the amount for singles under the Bush tax cuts.