What Income Tax Bracket Will You Be in for 2012?
September 26, 2011
In a new report, the Tax Foundation has calculated how much income taxpayers will need to have to be subject to each of the six individual tax brackets, based on the federal government's official inflation rate.
- Single filers making between $35,350 and $85,650, for example, will be subject to the 25 percent marginal tax rate, while only those making $388,350 or more will be subject to the highest marginal rate of 35 percent.
- Over the past 12 months inflation averaged 2.43 percent, which is slightly under the historical average since 1992, but significantly higher than the previous 12-month average of 1.48 percent.
- This information is used to calculate federal tax parameters such as the standard deduction, personal exemption and tax bracket thresholds.
- The Internal Revenue Service (IRS) will use these to set withholding rates on wages throughout 2012 and for 2012 tax forms to be filed in early 2013.
In addition to tax bracket information, the report includes the expected changes in the standard deduction for the four categories of filing status (individual, head of household, married filing jointly and married filing separately) and the change in the personal exemption, which is set to rise from $3,700 to $3,800.
Even though taxpayers will not start filing their 2012 tax returns until January 2013, tax year 2012 parameters are needed in advance of 2012 so that the IRS can produce instructions for 2012 income tax withholding, which will begin in January. Therefore, the inflation adjustments for any tax year must be based on inflation data from portions of the previous two years.
Source: "What Income Tax Bracket Will You Be in for 2012?" Tax Foundation, September 15, 2011.
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