Every year around this time, tax experts get together and use inflation data to project what the next year’s income tax brackets will look like. Last year, we had the added complexity of the fight over the fate of the Bush-era tax cuts, which could have changed the tax landscape entirely.
Ultimately, the tax cuts stayed in place and the 2011 income tax brackets were essentially a slightly modified version of the 2010 tax brackets. This year, there is no such drama, so it’s really just a matter of adjusting the brackets (and the standard deduction) for inflation.
Over the past year, inflation has averaged 2.43%, which is slightly below the average over the past 20 years, but higher than the previous year, when inflation ran at 1.48%. While the IRS uses a somewhat convoluted approach to make their adjustments, the good folks at the Tax Foundation have already run the numbers.
Federal Income Tax Brackets for 2012
Here’s a quick rundown of what the Federal income tax brackets are expected to look like in 2012:
||Married Filing Jointly
||$0 – $17,400
||$0 – $8,700
||$17,400 – $70,700
||$8,700 – $35,350
||$70,700 – $142,700
||$35,350 – $85,650
||$142,700 – $217,450
||$85,650 – $178,650
||$217,450 – $388,350
||$178,650 – $388,350
And here are a few related points:
- The personal and dependency exemption will rise to $3,800
- The standard deduction for married filing jointly will rise to $11,900
- The standard deduction for singles will rise to $5,950
Looking ahead, last year’s fighting resulted in a two year extension of the Bush-era tax cuts, which means that their currently set to expire at the end of 2012. As for what 2013 has in store for us, your guess is as good as mine.
Related: How Do Federal Income Tax Brackets Work?
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