Report: What Tax Bracket Will You Be In For 2013?

October 3, 2012 - 3:30 PM

tax

IRS tax form. (AP)

(CNSNews.com) – Unless Congress acts by year’s end to extend the Bush tax rates, Americans who make between $48,600 and $125,450 a year will see their tax rate climb to 28 percent; those who make up to $48,600 will have a 15 percent rate; and those who make more than $398,350 will pay a rate of 39.6 percent, according to a new report by the Tax Foundation. The median household income in 2011 was $50,054, a 1.5 percent decline over the median income for 2010, reports the Census Bureau.

For its analysis, the Tax Foundation explained that the Bureau of Labor Statistics has released its consumer price index (CPI) figure for August 2012, a number that “is typically the final piece of information needed to determine next year’s tax brackets, which are adjusted for inflation based on CPI figures from September to August of the previous year.”

The CPI average for the last 12 months is 2.57 percent higher than last year, reported the Tax Foundation, so “we can expect tax year 2013’s parameters to be roughly 2.57 percent higher than 2012’s.”

Given the uncertainty over whether Congress will vote to extend the Bush tax rates, the Tax Foundation presented three different scenarios and how each would affect tax brackets: 1) taxable income brackets and rates under full expiration of Bush tax cuts; 2) taxable income brackets and rates under HR 8, a bill to extend the Bush tax rates; and 3) taxable income brackets and rates under President Obama’s 2013 budget.

The Tax Foundation broke down the data by rate and for “single filers,” “married joint filers,” and “head of household filers.”  To see the complete charts, click here. Below are the rate changes only for “Head of Household Filers.” (The current tax bracket rates are 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent.)

2013 Taxable Income Brackets and Rates Under Full Expiration of Bush Tax Cuts

Rate Head of Household Filers

15%                 $0-$48,600

28%                 $48,600-$125,450

31%                 $125,450-$203,150

36%                 $203,150-$398,350

39.6%              $398,350+

 

2013 Taxable Income Brackets and Rates Under HR 8

Rate    Head of Household Filers

10%                 $0-$12,750

15%                 $12,750-$48,600

25%                 $48,600-$125,450

28%                 $125,450-$203,150

33%                 $203,150-$398,350

35%                 $398,350+

 

The other possibility, below, is “that President Obama’s 2013 budget is passed, which would allow the Bush tax cuts to expire only for upper-income taxpayers,” according to the Tax Foundation.

 

2013 Taxable Income Brackets and Rates Under President Obama’s 2013 Budget

Rate    Head of Household Filers

10%                 $0-$12,750

15%                 $12,750-$48,600

25%                 $48,600-$125,450

28%                 $125,450-$203,150

33%                 $203,150-$227,300

36%                 $227,300-$398,350

$39.6%            $398,350+

Under Obama’s proposed 2013 budget, Bush tax rates would be allowed to expire, but only for the top two percent of the wealthiest Americans.

As for deductions and exemptions, the Tax Foundation reported:  “This year, the personal exemption is $3,800. Next year it will rise to $3,900 regardless of what happens with the Bush tax cuts. The standard deduction for single filers is currently $5,950, and it will rise to $6,100 next year regardless of what happens with the Bush tax cuts. For married filers, it’s currently $11,900, and next year it will be $12,200 if the Bush tax cuts are extended and $10,150 if they aren’t.”

Michael W. Chapman contributed to this report.