Tax Brackets and Standard Deduction

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Here we offer the tax brackets and standard deduction information for the tax years 2011 and 2012, along with a few “revolutionary” thoughts on the income tax.

Income tax history and philosophy

Thanks to the 16th Amendment the government can tax income:

“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

The Bureau of Labor Statistics uses the inflation rates of the Consumer Price Index for All Urban Consumers (CPI-U), along with a host of other statistics, to calculate yearly tax brackets.

Income levels in tax brackets raise each year due to inflation, and inflation over the past year averaged 2.43%.

Inflation is a rise in the general level of prices of goods and services in an economy related to an increase in the volume of currency and resulting in the loss of purchasing power. The rate of decrease in the purchasing power of money is approximately equal to the rate of inflation.

Put another way, as inflation rises, purchasing power (a.k.a. wealth) decreases.

“1913 wasn’t a very good year. 1913 gave us the income tax, the 16th amendment and the IRS.” – Texas Congressman Ron Paul

Before revealing the modern income tax brackets, it’s worth noting that the Supreme Court ruled income taxation unconstitutional in 1895 before the Congress enacted it as law in 1913.

Federal Income Tax Brackets for 2012

Tax rateSingle filersMarried filing
jointly or qualifying
widow/widower
Married filing
separately
Head of household
10%Up to $8,700Up to $17,400Up to $8,700Up to $12,400
15%$8,701 – $35,550$17,401 – $70,700$8,701 – $35,350$12,401 – $47,350
25%$35,351 – $85,650$70,701 – $142,700$35,351 – $71,350$47,351 – $122,300
28%$85,651 – $178,650$142,701 – $217,450$71,351 – $108,725$122,301 – $198,050
33%$178,651 – $388,350$217,451 – $388,350$108,726 – $194,175$198,051 – $388,350
35%$388,351 or more$388,351 or more$194,175 or more$388,351 or more

Federal Income Tax Brackets for 2011

Tax rateSingle filersMarried filing
jointly or qualifying
widow/widower
Married filing
separately
Head of household
10%Up to $8,500Up to $17,000Up to $8,500Up to $12,150
15%$8,501 – $34,500$17,000 – $69,000$8,501 – $34,500$12,151 – $46,250
25%$34,501 – $83,600$69,001 – $139,350$34,501 – $69,675$46,251 – $119,400
28%$83,601 – $174,400$139,351 – $212,300$69,676 – $106,150$119,401 – $193,350
33%$174,401 – $379,150$212,301 – $379,150$106,151 – $189,575$193,351 – $379,150
35%$379,151 or more$379,151 or more$189,576 or more$379,151 or more

Note: Annual inflation is also used to calculate the standard deduction and personal exemptions.

Standard Deduction and Exemption for 2012

The value of each personal and dependent exemption, available to most taxpayers, is $3,800.

The standard deductions for 2012 are:

  • $5,950 for singles and married individuals filing separately
  • $8,700 for heads of household
  • $11,900 for married couples filing a joint return.

Standard Deduction and Exemption for 2011

The value of each personal and dependent exemption, available to most taxpayers, is $3,700.

The standard deductions for 2011 are:

  • $5,800 for singles and married individuals filing separately
  • $8,500 for heads of household
  • $11,600 for married couples filing a joint return.

Note: These numbers are projected and subject to new tax legislation therefore they could change so be sure to check www.IRS.gov for the latest information before filing taxes.

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References

  1. 2012 Consumer Price Index Summary by The Bureau of Labor Statistics
  2. Overview of BLS Statistics on Inflation and Prices by The Bureau of Labor Statistics
  3. Tax Foundation Projects 2012 Tax Parameters by The Tax Foundation
  4. 16th Amendment from The U.S. Government Printing Office
  5. Inflation on Wikipedia
  6. How To Calculate Inflation Rate on Inflationdata.com
  7. Pollock v. Farmers’ Loan & Trust Co. – 157 U.S. 429 (1895) on Justia.com U.S. Supreme Court Center
  8. Publication 501 Exemptions, Standard Deduction, and Filing Information on IRS.gov


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