The IRS released its annual inflation adjustments this week, including tax-rate schedules for 2013 and other tax changes from the American Taxpayer Relief Act of 2012.
These are some of the major changes, according to the IRS:
—The standard deduction increases from $5,950 to $6,100 for an individual and from $11,900 to $12,200 for married couples filing jointly for the 2012 tax year.
—Starting in the 2013 tax year, there is a new tax rate of 39.6 percent for individuals whose income is more than $400,000 and married taxpayers filing jointly whose income is more than $450,000. The other marginal rates—10, 15, 25, 28, 33 and 35 percent—are the same.
—The maximum earned income credit amount for taxpayers filing jointly who have three or more children increases from $5,891 in the 2012 tax year to $6,044 in 2013.
—The American Taxpayer Relief Act placed a limit for itemized deductions for the 2013 tax year for individuals with incomes of $250,000 or more, and married couples filing jointly who earn $300,000 or more.
—The personal exemption is $3,900 for the 2013 tax year, up from $3,800 in 2012. Starting in 2013, the exemption is subject to a phase-out that begins with individuals who have adjusted gross incomes of $250,000, and married couples with adjusted gross incomes of $300,000. It phases out completely at $372,500 for individuals and $422,500 for married couples.
—The Alternative Minimum Tax exemption increases from $50,600 for individuals in 2012 to $51,900 in 2013; and from $78,750 to $80,800 for married couples.