IRS announces tax adjustments
The Internal Revenue Service has announced annual inflation adjustments and other tax changes from the recently approved American Taxpayer Relief Act of 2012.
The changes of greatest interest to most taxpayers are listed below:
n Beginning in 2013 (generally for tax returns filed in 2014), a new tax rate of 39.6 percent has been added for individuals whose income exceeds $400,000, or $450,000 for married taxpayers who file a joint return. The other marginal rates -- 10, 15, 25, 28, 33 and 35 percent -- remain the same as in prior years. The guidance contains the taxable income thresholds for each of the marginal rates.
n The standard deduction rises to $6,100, or $12,200 for married couples filing jointly. The deduction was $5,950, or $11,900 for married couples filing jointly, during tax year 2012.
n The American Taxpayer Relief Act of 2012 has added a limitation for itemized deductions claimed on 2013 returns of individuals with incomes of $250,000 or more ($300,000 for married couples who file jointly).
n The personal exemption rises to $3,900, up from the 2012 exemption of $3,800. However, beginning in 2013, the exemption is subject to a phase-out that begins with adjusted gross incomes of $150,000 ($300,000 for married couples filing jointly). It phases out completely at $211,250 ($422,500 for married couples filing jointly).
n The Alternative Minimum Tax Exemption amount set for tax year 2013 is $51,900 -- $80,800 for married couples filing jointly -- as set by the American Taxpayer Relief Act of 2012, which indexes amounts for inflation. The 2012 exemption amount was $50,600 ($78,750 for married couples filing jointly).
n The maximum Earned Income Credit amount is $6,044 for taxpayers filing jointly who have three or more qualifying children, up from the $5,891 assessed during tax year 2012.
n Estates of decedents who die during 2013 have a basic exclusion amount of $5.2 million, more than the $5.12 million for the estates of antecedents who died in 2012.
n For tax year 2013, the monthly limitation regarding the aggregate fringe-benefit exclusion amount for transit passes and transportation in a commuter highway vehicle is $245, up from the $240 for tax year 2012. The legislation provided a retroactive increase from the $125 limit that had been in place.
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