Tax publisher CCH put out its estimates of ranges for 2012 tax brackets and projections for inflation-sensitive figures such as the standard deduction and the estate tax exemption, and it’s good news especially for the well-off, even those who die. Here’s what’s changing (and what isn’t).
The estate tax exemption will be indexed for the first time, so that for 2012, up to $5.120 million of an estate will be exempt from the current 35% federal estate tax. That’s up from $5 million in 2011; that means an individual could leave $120,000 more estate-tax-free if he dies on Jan. 1, 2012, not Dec. 31, 2011.
Indexing of brackets lowers tax bills by including more income in lower brackets. So a high-earning couple filing a joint return with taxable income of $450,000 in 2012 should pay $732 less in income taxes in 2012 than in 2011, figures CCH, a Wolters Kluwer business. They save the most because they benefit from bracket creep in the top bracket (the 35% rate bracket is projected to start at $388,350, up from $379,150 in 2011) as well as the rise in the bracket start amounts for the lower five brackets. By comparison, a couple filing jointly with taxable income of $100,000 should owe $190 less next year due to bracket adjustments, according to CCH.