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Home » Taxes

2011 Tax Rate Bracket Changes Announced by IRS

Last updated by on 9 Comments

Update: The 2012, 2013, and 2014 tax brackets & standard deductions have since been announced.

2011 Tax Rate Changes

I’ve been discussing the Obama tax cut deal a lot recently, since there were so many provisions that impact you. One of those provisions resulted in inflation adjusted changes to the 2010 tax brackets. The tax rates themselves have stayed the same as last year, however, the income brackets have all adjusted slightly upwards. These changes won’t be relevant when you file your 2010 taxes by this year’s tax deadline, however, it’s never too early to start planning ahead for 2011 taxes.

I was pleasantly surprised to see some inflation adjustment increases in the tax brackets because the 2011 401k maximum contribution and 2011 IRA maximum contributions were unchanged over 2010 due to a lack of inflationary pressure. Here is a breakdown on the new 2011 tax rates. You can also find out more through the official IRS tax rate amendment.

tax bracket

Tax Brackets for Singles:

10% – $0-$8,500 (up from $8,375)
15% – $8,500-$34,500 (up from $8,375-34,000)
25% – $34,500-$83,600 (up from $34,000-$82,400)
28% – $83,600-$174,400 (up from $82,400-$171,850)
33% – $174,400-$379,150 (up from $171,850-$373,650)
35% – $379,150+ (up from $373,650+)

Tax Brackets for Married Filing Jointly:

10% – $0-$16,750 (up from $0-$16,750)
15% – $17,000-$69,000 (up from $16,750-$68,000)
25% – $69,000-$139,350 (up from $68,000-$137,300)
28% – $139,350-$212,300 (up from $137,300-$209,250)
33% – $212,300-$379,150 (up from $209,250-$373,650)
35% – $379,150+ (up from $373,650+)

Tax Brackets for Married Filing Separately:

10% – $0-$8,500 (up from $0-$8,375)
15% – $8,500-$34,500 (up from $8,375-$34,000)
25% – $34-500-$69,675 (up from $34,000-$68,650)
28% – $69,675-$106,500 (up from $68,650-$104,625)
33% – $106,500-189,575 (up from $104,625-$186,825)
35% – $189,575+ (up from $186,825+)

Tax Brackets for Head Of Household:

10% – $0-$12,150 (up from $0-$11,950)
15% – $12,150-$46,250 (up from $11,950-$45,550)
25% – $46,250-$119,400 (up from $45,550-$117,650)
28% – $119,400-$193,350 (up from $117,650-$190,550)
33% – $193,350-$379,150 (up from $190,550-$373,650)
35% – $379,150+ (up from $373,650+)

Keeping IRS Tax Rates Lower on All Income

Remember that your overall tax rate is not at whatever bracket you fall in. Only the income that falls into that tax bracket is taxed at that rate. As an example, if you are filing single, your 2011 tax rate on your first $8,500 of income is at 10%, all income between $8,500 and $34,500 is at 15%, and so on.

If you anticipate that in 2011 you might have income that would be considered part of a higher bracket, you may want to take action to keep your income lower and avoid the higher taxes on the income that would fall into the higher bracket.

This might be a good time to revisit what your overall AGI might be this year and adjust your tax allowances so that you don’t get penalized or reduce your take home pay in other ways such as building up to the maximum 401K contribution.

There are other things you can do to lower your overall income as well:

Don’t Forget the Standard Deduction!

Also, keep in mind that there are standard tax deductions that will lower your income, if you don’t decide to itemize taxes. The 2011 standard deductions amounts have also increased:

  • $5,800 for single filers & married filing separately (up from $5,700)
  • $11,600 for married filers (up from $11,400)
  • $8,500 for head of household (up from $8,400)
  • $950 for dependents (same as 2010)

Tax Bracket Discussion:

  • Which tax bracket will you end up in for 2010?
  • What do you think about the 2011 tax rate changes?

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9 Comments »
  • BG says:

    Looks to be a savings of $112.50 for us. I’d say our medical costs alone have gone up 5 times higher than that, _easily_.

  • Brian says:

    For the most part non-impactful. On a related note (and I hesitate to potentially open up a can of worms), but is anyone else intrigued by the simplicity and social impact of the fair tax proposal brought to light by Huckabee in the 2008 election?

  • BG says:

    Brian) Looking at ‘The Basics’ on the fairtax.org website, I see:

    “The FairTax rate of 23 percent on a total taxable consumption base of $11.244 trillion will generate $2.586 trillion dollars: $358 billion more than the taxes it replaces.”

    and also,

    “Over time, the FairTax benefits all income groups. Of 42 household types (classified by income, marital status, age), all have lower average remaining lifetime tax rates under the FairTax than they would experience under the current tax system.”

    So, they are claiming that everyone will pay lower taxes, while at the same kind the government will receive more tax receipts.

    Fair Tax == Fairy Tax

    If the government is going to receive more in tax-receipts, then obviously _someone_ has to be paying more in taxes. Given the people who push this plan, my guess it that it raises taxes significantly on the poor.

    • Nathan says:

      Your missing one key point. An income tax only taxes individuals who work in our country while the Fair Tax taxes anyone who consumes in our country. That includes tourists and anyone getting paid under the table. How many drug dealers do you think file a tax return? However, they do make purchases.

      There are a lot of other economic benefits to taxing consumption versus income. It is those combinations that will lead to a lower tax rate per person and an increase in tax revenue overall.

  • Meredith says:

    Wow. Nice summary!
    Thanks for all of the financial help you’re providing for youngsters like me. This site is the best one I’ve found so far geared towards “20-something”s.

    If you were wondering, I’ll be attending college for the first time next year.

  • Jeff Walden says:

    BG, that’s not necessarily the case if the fair tax as proposed there (I haven’t read that particular proposal’s details, so I’m making some guesses) involves not just replacing existing taxes but also replacing existing tax deductions. Get rid of all deductions (or expenditures, if you prefer) and you can lower the tax rate because you don’t need as much money to “give back” to the taxpayers. Economists broadly agree that a simpler tax system is a better tax system.

    You also ignore the potential response to broad-based tax simplification. A massively simpler system, by its nature, is more transparent and difficult to swindle. It’s fewer numbers to track and generally less accounting overall, making fraud detection efforts much more successful. And might this heightened scrutiny make it less profitable to make the attempt in the first place? Right now the gains to tax-system scrutiny are relatively high. With a far simpler system there’s little to see and little to game. So people will waste less time on tax avoidance and spend more time on more productive pursuits, and they’ll part with their money more readily to pay taxes.

    One point about “fairness”. The current system is so riddled with special-case deductions and incentives that if you know how to use it well you can pay a good deal less than if you don’t know how to use it. Who do you think is most able to adapt to the byzantine complexity of the current system: the rich, or the poor?

  • crystal says:

    So If I file this weeek when will I recieve it?

  • Steve says:

    So after all this talk and deals for the wealthy my middle class payroll deduction just increased $40 for federal taxes, that along with the $90 increase on my health insurance is bothering me some … I do not know who to believe anymore…

  • krystal says:

    i dnt get this. what is the max for claiming kids in 2012? when do they have to be filed by? im claiming head of household and married but filing seperate too. i worked pt 9 months making 8.75 an hr claiming both my kids… what is a guess of what i’d be getting back? i never claimed all that before and my mom was claiming my kid(s) behind my back the past 8yrs! is this the last year ppl will be able to claim children?

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