The Internal Revenue Service has made a number of changes for tax year 2013 -- including the tax rate schedules – as a result of the recently-passed American Taxpayer Relief Act (ATRA) of 2012.
The tax items for 2013 of greatest interest to most taxpayers include the following changes:
- Beginning in tax year 2013 (generally for tax returns you will file a year from now), a new tax rate of 39.6 percent has been 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 guidance contains the taxable income thresholds for each of the marginal rates.
- The standard deduction rises to $6,100 ($12,200 for married couples filing jointly), from $5,950 ($11,900 for married couples filing jointly) for tax year 2012.
- The ATRA of 2012 added a 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, up $100 from the 2012 exemption. However beginning in 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), set by the ATRA of 2012, which indexes future amounts for inflation. The 2012 exemption amount was $50,600 ($78,750 for married couples filing jointly).
- The maximum Earned Income Credit amount is $6,044 for taxpayers filing jointly who have three (3) or more qualifying children; the total is $5,891 for tax year 2012.
- Estates of those who die during 2013 have a basic exclusion amount of $5,250,000, up $150,000 from the 2012 amount.
- For tax year 2013, the monthly limitation regarding the aggregate fringe benefit exclusion amount for transit passes and transportation in a commuter highway vehicle is $245, up $5 from tax year 2012 (the legislation provided a retroactive increase from the $125 limit that had been in place).