New Tax Brackets For 2013

The so-called fiscal cliff was averted at the last minute by the American Taxpayer Relief Act of 2012 (ATRA). There was much talk about changes to the income tax rates and the various income levels that may be impacted.  Below are the newly revised income tax brackets.

 

Rate

Single Filers Married Joint Filers Head of Household Filers

10%

$0 to $8,925 $0 to $17,850 $0 to $12,750

15%

$8,925 to $36,250 $17,850 to $72,500 $12,750 to $48,600

25%

$36,250 to $87,850 $72,500 to $146,400 $48,600 to $125,450

28%

$87,850 to $183,250 $146,400 to $223,050 $125,450 to $203,150

33%

$183,250 to $398,350 $223,050 to $398,350 $203,150 to $398,350

35%

$398,350 to $400,000 $398,350 to $450,000 $398,350 to $425,000

     39.60%

$400,000 and up $450,000 and up $425,000 and up

Source: National Association of Tax Professionals 2013

The 2013 income tax brackets apply to money you earn during 2013.  You may not notice how this does or does not affect you until you file your income taxes in 2014.  Also keep in mind that the tax rates listed in these tables are marginal rates. That means that you do not owe your rate on all of your income. For example, if you are married and earn $100,000 per year, you would not owe 25% on all of your income.  You would owe 10% of $17,850 (income in the first bracket), 15% of $54,650 (income in the second bracket) and 25% of $27,500  (income in the third bracket).  In this case your effective tax rate would be about 17%.

If you have additional questions please don’t hesitate to talk to your tax advisor.  If you are in the Texarkana area I will be more than happy to recommend a competent tax professional who is knowledgeable about the Act and its provisions.  You can find us at www.carrollinvestmentmanagement.com or send us an email at devin@carrollinvestmentmanagment.com.

The opinions voiced in this material are for are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.