What tax bracket am I in? It’s a question many Americans are asking themselves right about now, even though tax day—April 15, 2013—is a long way away. Below is a chart of the projected tax brackets for 2013, as posted on MyDollarPlan.com and numerous other websites.
|Tax Rate||Single||Married Filing Joint||Head of Household|
|10%||Up to $8,750||Up to $17,500||Up to $12,500|
|15%||$8,751 – $35,500||$17,501 – $71,000||$12,501 – $47,600|
|25%||$35,501 – $86,000||$71,001 – $143,350||$47,601 – $122,850|
|28%||$86,001 – $179,400||$143,351 – $218,450||$122,851 – $198,900|
|33%||$179,401 – $199,350||$218,451 – $241,900||$198,901 – $222,750|
|36%||$199,351 – $390,050||$241,901 – $390,050||$222,751 – $390,050|
|39.6%||Over $390,050||Over $390,050||Over $390,050|
The figures are based on President Obama’s budget proposal for 2013, and if the administration gets its way, the top tax rate will increase from 35 percent to 39.6 percent. The reason for the increase is that several tax cuts enacted under President George W. Bush are set to expire. Experts believe Congress won’t vote on the matter until after the 2012 presidential election, but if the Bush cuts are not extended, will mean higher taxes for most individual payers. A summary of the major changes is available at Mondaq.com.
As NovelInvestor.com points out, the increase would amount to $500 billion, or 3.4 percent of the U.S. GDP (gross domestic product). Democrats and Republicans are predictably split over the issue of tax increases, and those on the conservative side of the fence believe higher taxes will hurt job growth and corporate spending.
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Ever wonder how the current system came into being? The IRS created tiered tax brackets in 1913. The agency’s aim was to create revenue for the government while not overtaxing people who make less money, according to tax-brackets.org. As the website points out, the federal government later introduced dependent credits and deductions such as the Earned Income Tax Credit (EITC) to promote fairness for the lowest-earning families. As a result, the website reports, some 46 percent of Americans wind up paying no income tax.
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