Wondering what’s new for 2013 tax laws? Here’s a brief recap of new federal tax changes in 2013.
High-income households making more than $400,000 filing single, or $450,000 married filing joint, will move up a tax bracket from 35% to 39.6%. However, this will not affect the 2012 income tax return. Estate taxes are also increasing in 2013 for the wealthiest Americans. Any estates worth more than $5 million dollars will now face a 40% tax rate a 5% increase from last year. Read more on Gifting millions before new tax law 2013.
Social Security and Medicare tax changes will be reflected in your paycheck. Income earners will be taxed at 6.2% instead of at the 4.2% rate seen in 2011 and 2012 since the payroll tax holiday is now expired. The wage ceiling on which Social Security is taxed has been increased to $113,700. Medicare tax is unlimited, but if you earn more than $200,000 an additional 0.9% will be withhold.
Affordable Care Act Surcharge of 3.8% will take effect in 2013, on unearned income from rent, royalties, interest, dividends and some capital gains. This tax applies to those making more than $200,000 per year and to married couples filing jointly making over $250,000.
Earned Income Tax Credit increases for spouses filing jointly with three or more qualifying dependents in 2013 from $5,891 to $6,044.
Standard mileage rates for the business use of an automobile will be 56.5 cents per mile for business miles driven, 24 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations starting January 1, 2013.
The fiscal cliff legislation determined that the Pease itemized deduction phase-out is reinstated and the personal exemption phase-out will be reinstated. The thresholds are $300,000 for married filing joint, $275,000 for head of household and $250,000 for single. For those making that amount of money will not be allowed to take all of their itemized deductions. The personal exemptions subtraction from income before taxes are calculated – will be reduced.