Thursday, November 15, 2012

2012 Tax Brackets and How They Could Change in 2013

I found this very handy 2-page 2012 federal tax rate summary information on the internet.
(If the link above stops working, just send me an email to InvestorCookbooks(at) and I will send you the pdf file)

And you can find your state tax brackets by clicking here.

A lot of folks are curious about how tax rates might change in 2013 as part of the "Fiscal Cliff."  Certain tax cuts passed years ago will "expire" in January 2013 unless Congress agrees to extend the cuts.  Here are the main changes set to take place:

Long-term capital gains rates 15% now may rise to 20%
(if you make more than $200k/$250k (single/married) per year the Obamacare tax adds another 3.8%)

Dividends will no longer be taxed at the capital gains rates (15%) and will be taxed as ordinary income.

Ordinary income tax brackets may change as well.  The current lowest bracket of 10% may rise to 15%, while the highest bracket of 35% may become 39.6%.  Roughly speaking, the other tax brackets will increase by approximately 3% each. You can find the possible 2013 tax bracket changes by clicking here.

The Social Security tax (or FICA) taken out of each pay check has been 4.2% the past two years, but is scheduled to go back to its normal rate of 6.2%.

In addition, the Estate Tax rate could rise significantly and the Alternative Minimum Tax (AMT) thresholds could be triggered at lower levels of income.

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