Federal Income Tax Brackets for 2013

by Michael on Jan 15, 2013

Photo of 1040 Tax Form with a Pen and Calculator

Now that the dust has settled from the fiscal cliff debate, it’s time to update our federal income tax brackets for 2013.

Before I list the relevant details, however, I just wanted to take a moment to remind you exactly how tax brackets work

In our progressive tax system, the stated rates are marginal rates. That is, they only apply to the dollars in that particular bin, not to your total taxable income.

Thus, if you’re a single filer, your first $8,925 will be taxed at 10%, your next $27,325 will be taxed at 15%, and so on. The end result is an effective tax rate that is typically a good bit lower than your marginal rate.

As a result, moving to a higher tax bracket isn’t the income-decimating occurrence that some people think it is. If you slip across the line separating the 15% and 25% tax brackets, only the dollars above that mark will be taxed at the higher rate. Everything else will be taxed at 10% or 15%, as spelled out above.

In other words, moving to a higher tax bracket won’t cost you more money. It just makes those extra dollars that you’re earning worth a bit less.

And now, back to the topic at hand… The current tax brackets are as follows:

 Tax Bracket  Single Filers  Married Filing Jointly
10% Bracket $0 to $8,925 $0 to $17,850
15% Bracket $8,926 to $36,250 $17,851 to $72,500
25% Bracket $36,251 to $87,850 $72,501 to $146,400
28% Bracket $87,851 to $183,250 $146,401 to $223,050
33% Bracket $183,251 to $398,350 $223,050 to $398,350
35% Bracket $398,351 to $400,000 $398,351 to $450,000
39.6% Bracket $400,001+ $450,001+

Some other IRS tidbits:

  • The personal exemption stands at $3,900.
  • The standard deduction is $6,100 for single filers.
  • The standard deduction is $12,200 for married filing jointly.
  • The gift tax exclusion is $14,000 per giver/recipient.

As for retirement contribution limits, I’ve covered 401(k)/403(b)/457(b) limits as well as traditional/Roth IRA limits in separate articles.

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