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1 Nick Kasprak, Next Year's Tax Brackets 1 (2012)

handle is hein.taxfoundation/ffdcixz0001 and id is 1 raw text is: TAX S C FUDAT UNC° October 1, 2012 No. 328 Next Year's Tax Brackets By Nick Kasprak Introduction The Bureau of Labor Statistics recently released its August 2012 consumer price index (CPI) figure. This number is typically the final piece of information needed to determine next year's tax brackets, which are adjusted for inflation based on CPI figures from September to August of the previous year. Given that the CPI-U (consumer price index for all urban consumers) average for the previous twelve months is 2.57% higher than the previous year, we can expect tax year 2013's parameters to be roughly 2.57% higher than 2012's.1 Even though taxpayers will not start filing their 2013 tax returns until January 2014, tax year 2013 parameters are needed in advance of 2013 so that the IRS can produce instructions for 2013 income tax withholding, which will begin in January. Therefore, the inflation adjustments for any tax year must be based on CPI-U data from portions of the previous two years. Projecting 2013's brackets is more complicated than usual given the uncertainty surrounding the potential expiration of the Bush tax cuts (originally enacted in 2001 and 2003) and some more recent stimulus bill tax cuts (originally passed in 2009), but since tax parameters are adjusted for inflation in more or less the same way, the Tax Foundation can project next year's parameters under a variety of scenarios with a high degree of certainty. Brackets and Rates Unless Congress acts, the marriage penalty relief, new 10% bracket, and marginal rate reductions enacted in 2001 and 2003 will expire at the end of the year. If that were to happen, next year's brackets would look like this: 1 See Table Al in the appendix.

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