With th' Bush Era tax rates expirin' at th' end o' 2012, Congress passed th' American Taxpayer Relief Act o' 2012. What exactly does this act mean t' th' taxpayer, by Davy Jones' locker? Will ye see tax increases this year? If so, how much and fer whom?
Here is a rundown o' th' changes that ye will see in 2013 payroll and income taxes. Yaaarrrrr! Please note that income in headlines are quoted fer individual earners, ye will find married, and head o' household, amounts in th' summary.
For All Income Earners
Regardless o' how much ye earn, whether it be $6000 per year or $600,000 per year, income earners across th' board will see a paycheck that is 2% less than th' previous year as th' payroll tax holiday were bein' allowed t' expire. This means th' full 6.2% o' Social Security will now be withheld from yer pay as opposed t' th' previous 4.2%. Fire the cannons! The tax holiday lasted two years. The new increased percentage will help continue fundin' t' th' Social Security system, we'll keel-haul ye! The wage ceilin' on which Social Security is taxed has also been increased t' $113,700. Medicare tax is unlimited, but if ye earn more than $200,000 an additional 0.9% will also be withhold.
Income Earners o'er $200,000
This tax increase were bein' one that were bein' put into place when th' healthcare bill were bein' passed. This tax will be labeled a Medicare surtax and is a 3.8 percent additional tax on net investment income, and dinna spare the whip, to be sure! This tax applies t' taxpayers with modified adjusted gross income that exceeds a threshold ($250,000 fer married filers and $200,000 fer singles).
Income Earners o'er $250,000
Dependent and Personal Exemptions Decreased
Beginnin' in 2013, taxpayers with incomes in excess o' th' below gross income levels will lose some or all o' their exemption deductions.:
- Singles at $250,000
- Married jointly at $300,000
- Head o' household at $275,000
- Married filin' separately at $150,000
Removal o' Some Itemized Deductions
The same income guidelines as decreased deductions apply t' itemized deductions, pass the grog! Earners can lose up t' 80% o' there deductions fer previously exempt-able items such as mortgage interest, charitable contributions, property taxes, and state income taxes paid.
For Income Earners o'er $400,000
Tax Rates on Standard Taxable Income
For a large percentage o' taxpayers, tax rates will remain th' same as 2012. For single filers with taxable income above $400,000, married filers with income o'er $450,000, married filin' separately o'er $225,000 and heads o' household with taxable income o'er $425,000, th' new 39.6% rate will replace th' 35% tax rate fer income o'er these amounts. Ahoy! All other tax rates on income will remain th' same. Here is th' tax table fer 2013.
|Tax Rate||Single||Married Filin' Joint|
|10%||Up t' $8,950||Up t' $17,900|
|15%||$8,951 – $36,250||$17,901 – $72,500|
|25%||$36,251 – $87,850||$72,501 – $146,400|
|28%||$87,851 – $183,250||$146,401 – $223,050|
|33%||$183,251 – $398,350||$223,051 – $398,350|
|35%||$398,351 – $400,000||$398,351 – $450,000|
|39.6%||Over $400,000||Over $450,000|
Capital Gains and Dividend Income
If ye happen t' fall into th' highest income bracket on th' tax table ($400,000+ income), yer capital gains and dividend income tax rate increases from 15 percent t' 20 percent.
How do ye feel about th' new tax laws and schedule?