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2013 tax rates, income brackets

By Kay Bell · Bankrate.com
Tuesday, January 15, 2013
Posted: 4 pm ET

The one good thing about having to wait until Jan. 30 for the Internal Revenue Service to accept our 2012 tax returns is that we can explore some of 2013's tax changes.

For most of us there aren't a lot. The major accomplishment of the American Taxpayer Relief Act, aside from keeping the country (and us!) from falling off the "fiscal cliff," was that it made permanent most of the tax laws we've become used to following for the last 12 years.

What does this mean for me?

I know, permanence doesn't mean the same thing to Congress as it does to you, me and dictionary editors. Officially, it simply means that we don't have to worry about tax breaks like the $1,000 amount of the child tax credit expiring at a preset date.

Of course, the biggie from this latest tax bill is that it keeps the lower tax rates first enacted under the George W. Bush administration in place, aka, permanent.

And it tacks on a new top rate for wealthier folks.

But deciding what our 2013 and future taxes would look like was just one part of the process. We had to wait for the Internal Revenue Service to figure out, based on inflation, just how much of our earnings fall into these now permanent tax brackets.

Tah-dah! We now know.

The IRS has released the remainder of the 2013 inflation adjustments, including this year's tax rates and income brackets. Bankrate has published the complete information in a spanking new 2013 tax rates table.

2013 tax rates

Tax rate Single filers Married filing jointly or qualifying widow/widower Married filing separately Head of household
10% Up to $8,925 Up to $17,850 Up to $8,925 Up to $12,750
15% $8,926 - $36,250 $17,851 - $72,500 $8,926- $36,250 $12,751 - $48,600
25% $36,251 - $87,850 $72,501 - $146,400 $36,251 - $73,200 $48,601 - $125,450
28% $87,851 - $183,250 $146,401 - $223,050 $73,201 - $111,525 $125,451 - $203,150
33% $183,251 - $398,350 $223,051 - $398,350 $111,526 - $199,175 $203,151 - $398,350
35% $398,351 - $400,000 $398,351 - $450,000 $199,176 - $225,000 $398,351 - $425,000
39.6% $400,001 or more $450,001 or more $225,001 or more $425,001 or more

What to expect under the new brackets

The first $8,925 of your income is taxed at 10 percent if you're a single taxpayer. A head-of-household sees $12,750 of his income taxed at this lowest rate. Married couples filing a joint return have $17,850 of their income taxed at 10 percent. If the tax bill hadn't made this Bush-era rate permanent, all this money would have been taxed at 15 percent, so there's a 5 percentage point savings.

On the much publicized other end of the scale, which we all hope to one day reach even though we'll complain about the taxes then, single taxpayers will pay a tax rate of 39.6 percent if they make more than $400,000. That top tax rate kicks in for a head-of-household at $425,000 and a jointly filing couple at $450,000.

Now here comes the fun part of the 2013 tax table.

If you're tax geeky like me (and aren't you, since you're reading this blog?), you'll also notice that the 35 percent income bracket is tiny for single taxpayers. Only about $1,650 is covered in this filing status' tax bracket -- earnings from $398,351 to $400,000.

The spread is larger for head-of-household and married joint filers. Single taxpayers claiming dependents will see $26,650 of their earnings taxed at 35 percent. The penultimate tax rate will apply to $51,650 of a married couple's income.

But that $1,650 amount could be a problem one day. Depending on inflation, a single filer could soon see his or her income tax rate jump from 33 percent to the top 39.6 percent rate.

This is one of those frequent unintended consequences of hurried tax legislation. Don't be surprised if Congress soon revisits the rate structure and we have another big Capitol Hill fight over what to do about the incredibly shrinking 35 percent income tax bracket.

Want the latest news on taxes, tax reform prospects, filing deadlines, Internal Revenue Service alerts and tax-saving tips? Subscribe to Bankrate's free Daily Tax Tip newsletter, our Weekly Tax Tip newsletter or, if you're a true tax geek, both!

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29 Comments
Nixk
January 15, 2013 at 9:46 pm

right now i am watching braveheart the movie, now king shanks says he will tax the people more, etc if ya watched the movie you will know what i mean,,,now this leader whom i did not cast my vote for in both of his elections, sat on his azz the first 4 years and fooled the ppl for them,,,now he gets reelected and now is gonna give the shank to those who also voted for him and not him,,, do ya think that he is being fair, especally when in his first two years he could have gotten more done to fix the economy than work on his health care bill,, woe are we for his not taking the bull by the horns then...

todd
January 15, 2013 at 9:42 pm

to no comment r u still going to blame bush in 2016 after 8 years of obama, not bush fault for the last four same gov diff pres

Jim
January 15, 2013 at 6:53 pm

Don't forget the 2% increase in Social Security and Medicare taxes, plus for most of us outrageous state income taxes. 5% where I'm at.

NoComment
January 15, 2013 at 6:23 pm

Thank you Bush for the very expensive war. Oh yea - the initial tax rebates after 911 and fiasco of FEMA.

oh, my, bill
January 15, 2013 at 6:19 pm

Are our wonderful, thoughtful, politicians whom all are working for the benefit of those whom elected them, subjected to the same tax increased?? Don't think so!! Politicians have the best retirment and health benefits of any one in the good ol' USA.

Next time around, I will go to college to become either a meterologist or politican - no one expects a darn thing from either so called profession!!

Kay
January 15, 2013 at 5:57 pm

My bad, DDK. Yes, it's a 5 percentage point, not 5 percent, increase. Will correct. Thanks!

JLOCIO
January 15, 2013 at 5:55 pm

Where were the people that voted for the Commander in Chief Spender in November and are now upset with the results. He has even said (although no one listens or the mainstream media cuts out comments) "SPENDING IS NOT THE PROBLEM" he needs a lesson in Economics from business leaders and the average person that cannot spend more than they have.

One other point the Debt ceiling does not mean America will not be able to pay their bills or they must hold up checks to Veterns and Seniors. Scare tactics to gain more control over our money....

F_This
January 15, 2013 at 5:20 pm

I find it ridiculous that the federal government wastes billions of dollars, then they rape workers wanting 35% or more of your hard earned money. Really? 35% of my money. That is too much. Control your spending you bunch of morons. If they did that, our tax rate would be 5%. It's to easy for them to spend other peoples money. I guarantee you their not that frivolous with their own money.

DDKavanagh
January 15, 2013 at 4:59 pm

The increase from 10% to 15% is a 50% increase, not 5%. At 10% the tax on $10,00 is $1000. At 15% the tax on $10,000 is $1500. That is a $500 increase,or 50%. A 5% increase would only be 50¢.

DDK

Loren Sidle
January 15, 2013 at 4:30 pm

What is the big secret of not puting into print the extra exemption for seniors???????????????