For over two decades, the Tax Code has required that federal income tax brackets and certain other figures be adjusted for inflation annually. CCH, a Wolters Kluwer business, has projected several key projected inflation-adjusted tax amounts for the 2012 tax year based on the relevant inflation data just released by the U.S. Department of Labor (DOL):
- Single and joint filers both should expect to see an increase in their standard deduction for 2012 due to inflation adjustments, rising to $5,950 and $11,900, respectively (from $5,800 and $11,600 in 2011);
- Heads of households will see a $200 increase in the standard deduction to $8,700;
- Single filers will see a rise in their top bracket to taxable-income-over-$388,350 (from $379,150 in 2011) and a rise in their 15-percent bracket to taxable-income-not-over $35,350 (up from $34,500 in 2011);
- Married filers filing jointly also will see a rise in their top bracket to taxable-income-over-$388,350 (from $379,150 in 2011); and will see a rise in the top of their 15-percent bracket to $70,700 (from $69,000 in 2011);
- Personal and dependency exemptions for 2012 will rise to $3,800 from their 2011 level of $3,700;
- The gift tax annual exclusion remains at $13,000 ($26,000 for split gifts); and
- The foreign earned income exclusion is scheduled to rise from $92,900 to $95,100 in 2012.
Increases in applicable inflation-sensitive tax amounts generally were higher for 2012 than for the past several years due to an uptick in inflation to about the 3.8 percent level. Official IRS amounts for 2012 must be released by December 15, 2011.