American Taxpayer Relief Act and Federal Income Tax

Although it was not officially signed into law until the first few days of 2013, Congress and President Obama passed a measure, the American Taxpayer Relief Act of 2012, to avert the fiscal cliff and prevent the expiration of a large number of Bush-era tax cuts.

But now that the American Taxpayer Relief Act of 2012 has been passed into law and those Bush-era tax cuts are permanent, what does it mean to you?  Read on to learn more.

For more information about federal income taxes in general, please visit our web site’s “Tax Relief” page.

2012 Federal Income Tax

The newly-passed tax measures apply to income earned in 2013.  That means that as you prepare your federal income tax return for 2012, you will still use the 2012 federal income tax brackets and marginal tax rates.  These tax brackets and marginal tax rates are as follows:

Individual

Standard Deduction – $5,950

When Taxable Income Is: The Income Tax Owed Is:
Up to $8,700 10% of the taxable income
Over $8,700 but up to $35,350 $870 plus 15% of taxable income over $8,700
Over $35,350 but up to $85,650 $4,867.50 plus 25% of taxable income over $35,350
Over $85,650 but up to $178,650 $17,442.50 plus 28% of taxable income over $85,650
Over $178,650 but up to $388,350 $43,482.50 plus 33% of taxable income over $178,650
Over $388,350 $112,683.50 plus 35% of taxable income over $388,350

Married Filing Jointly

Standard Deduction – $11,900

When Taxable Income Is: The Income Tax Owed Is:
Up to $17,400 10% of the taxable income
Over $17,400 and up to $70,700 $1,740 plus 15% of taxable income over $17,400
Over $70,700 and up to $142,700 $9,735 plus 25% of taxable income over $70,700
Over $142,700 and up to $217,450 $27,735 plus 28% of taxable income over $142,700
Over $217,450 and up to $388,350 $48,665 plus 33% of taxable income over $217,450
Over $388,350 $105,062 plus 35% of taxable income over $388,350

Married Filing Separately

Standard Deduction – $5,950

When Taxable Income Is: The Income Tax Owed Is:
Up to $8,700 10% of the taxable income
Over $8,700 but up to $35,350 $870 plus 15% of table income over $8,700
Over $35,350 but up to $71,350 $4,867.50 plus 25% of table income over $35,350
Over $71,350 but up to $108,725 $13,867.50 plus 28% of table income over $71,350
Over $108,725 but up to $194,175 $24,332.50 plus 33% of table income over $108,725
Over $194,175 $52,531 plus 35% of table income over $194,175

Head of Household

Standard Deduction – $8,700

When Taxable Income Is: The Income Tax Owed Is:
Up to $12,400 10% of the taxable income
Over $12,400 but up to $47,350 $1,240 plus 15% of taxable income over $12,400
Over $47,350 but up to $122,300 $6,482.50 plus 25% of taxable income over $47,350
Over $122,300 but up to $198,050 $25,220 plus 28% of taxable income over $122,300
Over $198,050 but up to $388,350 $46,430 plus 33% of taxable income over $198,050
Over $388,350 $109,229 plus 35% of taxable income over $388,350

2013 Federal Income Tax

Based on the American Taxpayer Relief Act of 2012, the marginal tax rates for 2013 and beyond are as follows.  Since these tax rates have been signed into law, they will be in effect permanently until Congress passes a new law that makes changes to the rates.

Rate Single Married Filing Jointly Head of Household
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
39.6% $400,000 and up $450,000 and up $425,000 and up

Remember that as the rates above are marginal tax rates, a given tax rate only applies on taxable income to the limit of a given tax bracket.  Any dollars earned above one tax bracket would then be taxed at the next marginal tax rate, and so on, up to the full amount of taxable income.

Where can I get help if I have questions about preparing my federal income tax return?

If you have questions about the effect of the American Taxpayer Relief Act of 2012 on your specific situation, marginal tax rates, or preparing your federal income tax return, you can call the telephone number at the top of this page to get help.  You can speak with tax attorney free of charge who understands the new tax laws and can help with your specific questions.

Therefore, make the call and get help with your federal income taxes today.

by Mark Johnston

Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.