It will help to know these 2012 income tax rates as you prepare your return.
The 2013 tax season is right around the corner. After the mad rush of the holidays it will be time for all of us to sit down and take a long hard look at our finances for the year 2012. Acquainting yourself with the new U.S. federal income tax rates is a key step in that process.
The federal income tax rates for 2012 are pretty much the same as they were for 2011 but they have been adjusted slightly for inflation.
Your tax rate depends on your filing status and your income. On the chart below find your filing status and then find your total taxable income. The corresponding percentage is your marginal tax rate.
Note that the brackets for married filing separately and head of household are not included in this post. You can find them here.
Married Filing Jointly Income
In all likelihood your effective tax rate will be much lower than the marginal tax rates listed here. That’s because each of the tax rates above only applies to the taxable income that falls inside that bracket. The rest of your taxable income will be taxed at the rates of the lower brackets.
For example, if you’re a single filer with a taxable income of $30,000, your marginal tax rate is 15%. But only that portion of your income above $8,700 (in this case $21,300) is taxed at 15%. The first $8,700 is taxed at 10%.
What do these rates apply to?
Remember, these brackets only apply to your taxable income, which is not the same thing as your gross income. In fact, your taxable income is likely to be much less than your gross income.
That’s because your overall income is reduced by several significant figures, including personal exemptions and the standard deductions, both of which have been adjusted for inflation.
The personal exemption, which is the amount you can subtract from your adjusted gross income (AGI) for you, your spouse, and your dependents, has increased to $3,800.
The standard deduction, the automatic amount you are allowed to deduct if you do not itemize taxes, has increased as well to $5,900 for single filers and $11,900 for married filing jointly.
Thus a significant chunk of your income will be completely excluded from income tax.
Congress does as Congress wants.
Unless Congress acts to extend some or all of these tax rates, this is the last year that they will be in place, as the Bush tax cuts are currently set to expire on January 1, 2013. So, boring as it may be, when you file your 2012 taxes you may actually be bearing witness to a piece of history.
Photo via Infrogmation of New Orleans on Flickr.