Tax Rates for the 2012 Tax Year

2012 Tax Rates

The year 2012 could be the last year for America's current tax rate structure. Six tax rates, ranging from 10% to 35%, have been in place since 2003. The Tax Relief Act of 2010 temporarily extended the current tax rate structure through the end of 2012. Tax rates will revert automatically to their pre-2003 levels unless new legislation is passed.

For 2012, there will be six tax rates of:

• 10%,
• 15%,
• 25%,
• 28%,
• 33%, and
• 35%.

The tax rates for 2013 are scheduled to change as follows: the 10% rate will be collapsed into the 15% rate; the 25% rate will become 28%; the 28% rate will become 31%; the 33% rate will become 36%; and the 35% rate will become 39.6%. These tax rate changes will take effect beginning in 2013 absent further legislation.

Capital gain income might be taxed at different rates. There are special capital gains tax rates that apply for dividends, long-term investments, collectibles, and certain types of real estate.

Note: These tax rate schedules are provided for tax planning purposes. To compute your actual income tax, please see the 2012 instructions for Form 1040 and the 2012 Tax Tables.

Each tax rate applies to a range of income, which is called a tax bracket. Each tax rate applies to a specific range of taxable income, which is income after various deductions have been subtracted.

Single Filing Status

[Tax Rate Schedule X, Internal Revenue Code section 1(c)]

• 10% on taxable income from $0 to $8,700, plus
• 15% on taxable income over $8,700 to $35,350, plus
• 25% on taxable income over $35,350 to $85,650, plus
• 28% on taxable income over $85,650 to $178,650, plus
• 33% on taxable income over $178,650 to $388,350, plus
• 35% on taxable income over $388,350.

Married Filing Jointly or Qualifying Widow(er) Filing Status

[Tax Rate Schedule Y-1, Internal Revenue Code section 1(a)]

• 10% on taxable income from $0 to $17,400, plus
• 15% on taxable income over $17,400 to $70,700, plus
• 25% on taxable income over $70,700 to $142,700, plus
• 28% on taxable income over $142,700 to $217,450, plus
• 33% on taxable income over $217,450 to $388,350, plus
• 35% on taxable income over $388,350.

Married Filing Separately Filing Status

[Tax Rate Schedule Y-2, Internal Revenue Code section 1(d)]

• 10% on taxable income from $0 to $8,700, plus
• 15% on taxable income over $8,700 to $35,350, plus
• 25% on taxable income over $35,350 to $71,350, plus
• 28% on taxable income over $71,350 to $108,725, plus
• 33% on taxable income over $108,725 to $194,175, plus
• 35% on taxable income over $194,175.

Head of Household Filing Status

[Tax Rate Schedule Z, Internal Revenue Code section 1(b)]

• 10% on taxable income from $0 to $12,400, plus
• 15% on taxable income over $12,400 to $47,350, plus
• 25% on taxable income over $47,350 to $122,300, plus
• 28% on taxable income over $122,300 to $198,050, plus
• 33% on taxable income over $198,050 to $388,350, plus
• 35% on taxable income over $388,350.

How Marginal Tax Rates are Used

Individuals can use the tax rate schedules in a number of ways to help plan their finances. You can use these tax rates to figure out how much tax you will pay on extra income you earn. For a taxpayer in the 25% tax bracket, extra income will be taxed at that rate until the taxpayer reaches the next tax bracket.

Alternatively, you can use these tax rates to figure out how much tax you will save by increasing your deductions. A taxpayer in the 28% tax bracket, for example, will save 28 cents in federal tax for every dollar spent on a tax-deductible expense, such as mortgage interest or charity.

Be aware that marginal tax rates interact with other tax rates, including the alternative minimum tax, Social Security tax, and Medicare tax rates. In particular, the alternative minimum tax can push income into a higher tax rate or eliminate the tax savings of deductions.

Source: the official tax brackets for 2012 were published by the Internal Revenue Service in Revenue Procedure 2011-52 (21 pages, pdf).