When all is said and done, what are the actual tax brackets and rates this year? The fiscal cliff compromise bill that passed Congress preserves Bush-era rates for taxpayers making under $400K (single filers)/$450K (joint filers) in taxable incomeTaxable income is the amount of income subject to tax, after deductions and exemptions. Taxable income differs from—and is less than—gross income. . Last year, we predicted 2013 tax bracketsA tax bracket is the range of incomes taxed at given rates, which typically differ depending on filing status. In a progressive individual or corporate income tax system, rates rise as income increases. There are seven federal individual income tax brackets; the federal corporate income tax system is flat. under various scenarios using the IRS’s method of adjusting taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. brackets for inflation; based on that work, we can confidently say that this year’s tax brackets are as follows:
| Table: 2013 Tax Rates and Brackets | ||
|---|---|---|
| Filing Status | Taxable Income | Rate |
| Single | $0 to $8,925*: | 10% |
| $8,925* to $36,250: | 15% | |
| $36,250 to $87,850: | 25% | |
| $87,850 to $183,250: | 28% | |
| $183,250 to $398,350: | 33% | |
| $398,350 to $400,000: | 35% | |
| $400,000+: | 39.6% | |
| Joint | $0 to $17,850*: | 10% |
| $17,850* to $72,500: | 15% | |
| $72,500 to $146,400: | 25% | |
| $146,400 to $223,050: | 28% | |
| $223,050 to $398,350: | 33% | |
| $398,350 to $450,000: | 35% | |
| $450,000+: | 39.6% | |
| Head of Household | $0 to $12,750*: | 10% |
| $12,750* to $48,600: | 15% | |
| $48,600 to $125,450: | 25% | |
| $125,450 to $203,150: | 28% | |
| $203,150 to $398,350: | 33% | |
| $398,350 to $425,000: | 35% | |
| $425,000+: | 39.6% | |
Edit: The bill also appears to adjust other AMT parameters for inflationInflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spending power.
as well. The boundary between the 26% and 28% brackets has been $175,000 for decades; it will be so for 2012 as well and adjusted for subsequent years. In 2013 we calculate it to be $179,500. Likewise, the AMT exemption phaseout has, for may years, started at $112,500 for single filers and $150,000 for joint filers – in 2013 it will rise to $115,400 for single filers and $153,900 for joint filers.We also finally know what the AMT exemption levels are, both for 2012 and 2013. The bill sets the 2012 exemption level at $50,600 for single filers and $78,750 for joint filers and adjusts these amounts for inflation thereafter. In 2013, inflation adjustments will result in an exemption level of $51,900 for single filers and $80,800 for joint filers, according to our calculations.
*Erratum: Upon closer reading of the relevant statutes, we’ve determined that our method for adjusting the top of the 10% bracket wasn’t using the correct base year. We’ve fixed our calculation and adjusted the table as of 5:27 PM on January 3rd.
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