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Next Year’s Tax Brackets

1 min readBy: Nick Kasprak

This morning, the Bureau of Labor Statistics released its August 2011 estimate for the Consumer Price Index (CPI), which allows us to determine what next year’s 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 will look like. The IRS uses CPI numbers to adjust tax brackets (and other 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. ; each year’s brackets are based on the CPI-U from September to August of the previous year. The August 2011 number is therefore the final piece of data needed to determine the tax bracketA 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. s for 2012.

Key Tax Parameter Amounts for 2012
Tax Parameter 2011 Amount 2012 Amount
Standard Deduction
For singles $5,800 $5,950
For married filing jointly $11,600 $11,900
For heads of households $8,500 $8,700
For married filing separately $5,800 $5,950
Personal Exemption $3,700 $3,800
Tax Bracket Thresholds for Single Filers
10% rate $0 $0
15% rate $8,500 $8,700
25% rate $34,500 $35,350
28% rate $83,600 $85,650
33% rate $174,400 $178,650
35% rate $379,150 $388,350
Tax Bracket Thresholds for Heads of Households
10% rate $0 $0
15% rate $12,150 $12,400
25% rate $46,250 $47,350
28% rate $119,400 $122,300
33% rate $193,350 $198,050
35% rate $379,150 $388,350
Tax Bracket Thresholds for Married Filing Jointly
10% rate $0 $0
15% rate $17,000 $17,400
25% rate $69,000 $70,700
28% rate $139,350 $142,700
33% rate $212,300 $217,450
35% rate $379,150 $388,350
Tax Bracket Thresholds for Married Filing Separately
10% rate $0 $0
15% rate $8,500 $8,700
25% rate $34,500 $35,350
28% rate $69,675 $71,350
33% rate $106,150 $108,725
35% rate $189,575 $194,175
Source: Tax Foundation calculations using BLS CPI-U Data

For more information and detail, read our latest report, “Tax Foundation Projects 2012 Tax Parameters Following Release of August CPI Data.”

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