Fredrick Tax LLC
7101 15th Ave. S.
Richfield, MN 55423(by appointment only)
Crowdfunding & Taxes
Web services by
Tax News - September 3rd, 2012We keep you informed about the tax laws that affect your current AND future tax circumstances.
Everyone's Taxes Are Going UpDid you know that if Congress and the President don't agree to change the tax laws by the end of THIS YEAR, then everyone's taxes will go up? The "Bush Tax Cuts" that went into effect in 2001 lowered the tax rate for every single American, regardless of your income. It was an across the board tax cut.
Our tax system is built on a marginal tax rate design. That means that each bracket of money that you earn is taxed at different percentages based on how much you made. As you make more money, the government takes a higher percentage of it. The chart below shows what the current "Bush Tax" rates are, and what all the rates will increase to on January 1st, 2013, once these "Bush Tax Cuts" expire.
|Federal Tax Rates for Married Filing Jointly Status|
|Income Level||2012 Federal|
|Up to $17,400||10%||15%||+5%|
|$17,401 - $70,700||15%||15%||0%|
|$70,701 - $142,700||25%||28%||+3%|
|$142,701 - $217,450||28%||31%||+3%|
|$217,451 - $388,350||33%||36%||+3%|
|$388,351 or more||35%||39.6%||+4.6%|
As the above table illustrates, even if you are in the very lowest tax bracket, your taxes will be going up. And this is just the "Bush Tax Cuts" part! There are many more tax increases that kick in January 1st. Some include:
- The child tax credit will drop from $1,000 down to $500.
- The social security "Payroll Tax Cut" (which dropped an employee's social security tax from 6.2% to 4.2%) will expire, causing everyone's taxes to increase up to 2%.
- Capital gains taxes will increase for everyone. The 0% bracket moves up to 10%, and the 15% bracket moves up to 20%.
- Many other increases include things like estate tax, AMT rules, education credits, personal exemptions, etc.