On November 1st, New Jersey residents will start paying considerably higher gas taxes, with the rate rising from 14.5 to 37.5 cents per gallon (cpg) as part of a broader tax deal negotiated between Governor Chris...
- What Income Tax Bracket Will You Be in for 2012?
What Income Tax Bracket Will You Be in for 2012?
Tax Foundation Calculates Latest IRS "Tax Parameters"
Washington, DC, September 15, 2011 -- Based on the federal government's official inflation rate, the Tax Foundation has now calculated how much income taxpayers will need to have to be subject to each of the six individual tax brackets. Single filers making between $35,350 and $85,650, for example, will be subject to the 25% marginal tax rate, while only those making $388,350 or more will be subject to the highest marginal rate of 35%.
Over the past twelve months inflation averaged 2.43%, which is slightly under the historical average since 1992, but significantly higher than the previous 12-month average of 1.48%, according to a new report by the Tax Foundation. This information is used to calculate federal tax parameters such as the standard deduction, personal exemption, and tax bracket thresholds. The Internal Revenue Service will use these to set withholding rates on wages throughout 2012 and for 2012 tax forms to be filed in early 2013.
"Last year's projection of this year's tax brackets was complicated by the uncertainty over the potential expiration of the Bush tax cuts, and the need to predict the bracket thresholds for a number of possible scenarios," said Tax Foundation Analyst Nick Kasprak. "Fortunately, this year's projection is comparatively simple: last year's tax compromise extended the Bush tax cuts for two years, so there is no doubt they'll be in effect during the next tax year."
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.
The Tax Foundation is a nonpartisan research organization that has monitored fiscal policy at the federal, state and local levels since 1937. To schedule an interview, please contact Richard Morrison, the Tax Foundation's Manager of Communications, at 202-464-5102 or firstname.lastname@example.org.
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