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CCH says to expect slightly higher standard deduction and personal exemption amounts for 2012 in most cases, as well as amounts that might be claimed from an increase in the income ceilings imposed on tax benefits such as education credits, individual retirement account contributions and more.
"Combined, inflation-based tax savings for 2012 can become substantial," the CCH analysis says. "Because of inflation adjustments, a married couple filing jointly with a total taxable income of $100,000 should pay $190 less income taxes in 2012 than they will on the same income for 2011 because of indexing of their tax bracket for 2012. A single filer with taxable income of $50,000 should owe $95 less next year due to the adjustments to the income tax rate brackets between 2011 and 2012."
For taxpayers with taxable income over the start of the top 35% bracket, the maximum dollar savings from indexing the tax brackets for 2012 will be "more dramatic."
"Not only is the top 35% rate bracket projected to rise from $379,150 to $388,350, but, as is the case for all individual taxpayers, the rise in the bracket amounts below the individual's top marginal rate (that is, the incremental value of the 10%, 15%, 25%, 28%, and 33% brackets for someone in the 35% marginal rate bracket) also benefits the individual taxpayer," CCH says. "As a result of the inflation adjustment in each of the brackets, someone filing a joint return with taxable income of $450,000 in 2012, for example, will pay $732 less in income taxes in 2012 than in 2011."
Among the new inflation-adjusted tax figures for 2012 is the estate tax exemption. Previously set at $5 million, an inflation adjustment means that up to $5.1 million of an estate will be exempt from the current 35% tax.
Also increasing are contribution limits to most retirement savings plans -- including 401(k), 403(b) and the federal Thrift Savings Plan -- from $16,500 in 2011 to $17,000 ("catch-up" contribution limits for those 50 and older remain at $5,500).