The Internal Revenue Service announced annual inflation adjustments for tax year 2013, and other tax changes from the recently passed American Taxpayer Relief Act of 2012.
Recap of items with greatest interest to most taxpayers:
- New tax rate of 39.6 percent added for individuals whose income exceeds $400,000 ($450,000 for married taxpayers filing a joint return).
- The other marginal rates — 10, 15, 25, 28, 33 and 35 percent — remain the same as in prior years.
- The standard deduction rises to $6,100 ($12,200 for married couples filing jointly).
- New limitation for itemized deductions claimed on 2013 returns of individuals with incomes of $250,000 or more ($300,000 for married couples filing jointly).
- The personal exemption rises to $3,900. Beginning 2013, the exemption is subject to a phase-out that begins with adjusted gross incomes of $250,000 ($300,000 for married couples filing jointly). It phases out completely at $372,500 ($422,500 for married couples filing jointly.)
- The Alternative Minimum Tax exemption amount for tax year 2013 is $51,900 ($80,800, for married couples filing jointly).
- The maximum Earned Income Credit amount is $6,044 for taxpayers filing jointly who have 3 or more qualifying children.
- Estates of decedents who die during 2013 have a basic exclusion amount of $5,250,000.
- Monthly limitation regarding the aggregate fringe benefit exclusion amount for transit passes and transportation in a commuter highway vehicle is $245.
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