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tax topics

2012 Budget


Allow Top Two Rates to Rise 36% and 39.6% After 2012 

The president proposes to allow the top tax rate in 2013 to increase from 35 percent to 39.6 percent as scheduled under current law. In 2013, that would increase income tax liability for all taxpayers with taxable income over $390,050 (half that amount for married couples filing separately).

Increase the 33% Tax Rate to 36% Only for Joint Filers with Adjusted Gross Income Over $250,000 ($200,000 for Single Filers) in 2013

The president proposes to allow the 33 percent tax rate to return to its pre-2001 level of 36 percent as scheduled under current law but only for joint filers with adjusted gross income over $250,000 ($200,000 for single filers, with both values in 2009 dollars and indexed for inflation in future years). For married couples filing jointly, the 36 percent bracket would begin when taxable income exceeds $250,000 minus the sum of the standard deduction for couples and the taxpayers’ personal exemptions. For single filers, the threshold would start at $200,000 minus the sum of the standard deduction for single filers and the taxpayer’s personal exemption.* The president would maintain the 33 percent tax rate for income below those thresholds that is currently taxed at 33 percent. Maintaining the 33 percent bracket for taxpayers below the thresholds would represent a tax cut relative to current law under which the tax rate would rise to 36 percent.

FY2013 Tax Rates, Standard Deduction, and Personal Exemption under Alternative Baselines and as Proposed in the 2012 Budget

*Tax brackets for heads of household would be set midway between those for single and joint filers; those for married couples filing separately would be half those for joint filers.