At around this time each year, various institutions will make a stab at next year’s tax brackets. The cycle was a little broken last year as Congress and the President waited until much later in the tax year to decide on the Bush era tax cuts (they were extended for two years). While there are a few unsettled issues this year, there aren’t any that affect the base tax brackets themselves so this fun little exercise is probably going to be accurate for next year.
The Tax Foundation took a look the Consumer Price Index for urban consumers (CPI-U) and used it to adjust the tax brackets, standard deduction, and personal exemption to give us a good look at how our brackets will look next year.
CPI-U & Calculating Brackets
According to the Bureau of Labor Statistics, inflation from Sept 2010 through August 2011 was 2.43% – that what will be used to calculate the new tax brackets. As the Tax Foundation put it, the IRS uses a “somewhat complicated formula” that isn’t that complicated. In essence, the figure out how much CPI-U has grown from the base year and adjust the value accordingly, rounding down to the nearest $50. (it’s only complicated because 2012 taxes are calculated based on Sept 2010 to Aug 2011 inflation figures… because they need time to print the forms and instructions!)
So if we know this is what they’re doing, why are these “projected” figures? The BLS can revise the August 2011 figure in October 2011, but that adjustment is most likely not going to be large enough to affect these rates (since numbers are rounded down to the closest $50). However, they could change depending on the revision.
2012 Projected Tax Brackets
Here are the projected 2012 tax tables (here are the 2011 tax brackets for comparison):
|Tax Bracket||Single||Married Filing Jointly||Head of Household|
|10% Bracket||$0 – $8,700||$0 – $17,400||$0 – $12,400|
|15% Bracket||$8,700 – $35,500||$17,400 – $70,700||$12,400 – $47,350|
|25% Bracket||$35,500 – $85,650||$70,700 – $142,700||$47,350 – $122,300|
|28% Bracket||$85,650 – $178,650||$142,700 – $217,450||$122,300 – $198,050|
|33% Bracket||$178,650 – $388,350||$217,450 – $388,350||$198,050 – $388,350|
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Other Notable IRS Tax Numbers
The standard deduction will increase for everyone as well:
- Single filers – $5,980 (increase of $150 from $5,800)
- Married filing jointly – $11,900 (increase of $300 from $11,600)
- Heads of household – $8,700 (increase of $200 from ($8,500)
So, plan your tax moves accordingly.please add your thoughts now! }