American Taxpayer Relief Act of 2012: Individual Income Tax Rates for 2013

The American Taxpayer Relief Act of 2012 (the “Act”) was signed into law on January 2, 2013. The Act contains numerous important tax provisions aimed at stabilizing the tax environment and averting the so-called “fiscal cliff.” One of the most important effects of the Act is its impact on the marginal individual income tax rates.

The Act permanently extends the 10%, 25%, 28%, 33%, and 35% individual income tax rates in effect in 2012 except for taxpayers with taxable income above a certain threshold amount. For the taxpayers with taxable income above the threshold amount the marginal tax rate will be 39.6%.

As adjusted for inflation, the following marginal income tax rates will apply to individuals in the tax year 2013:

Filing Single

10% $0 – $8,925
15% $8,925 – $36,250
25% $36,250 – $87,850
28% $87,850 – $183,250
33% $183,250 – $398,350
35% $398,350 – $400,000
39.6% $400,000 and greater

Notice the minuscule range of the 35% tax bracket.

Filing Married Filings Jointly

10% $0 – $17,850
15% $17,850 – $72,500
25% $72,500 – $146,400
28% $146,400 – $223,050
33% $223,050 – $398,350
35% $398,350 – $450,000
39.6% $450,000 and greater

Filing Married Filings Separately

10% $0 – $8,925
15% $8,925 – $36,250
25% $36,250 – $73,200
28% $73,200 – $111,525
33% $111,525 – $199,175
35% $199,175 – $225,000
39.6% $225,000 and greater

Filing Head of Household

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 – $425,000
39.6% $425,000 and greater