Marginal tax rates and how they are set to impact you in 2011

A few weeks ago, President Obama along with the Congress gave life to a bill that would see an extension of the Bush era tax cuts. Now if the Republicans hadn’t gained a majority in the house, it most certainly wouldn’t have passed. But facts are facts and it most certainly did pass. H.R.4853 is what you have to look out for. For some time now, there has been talk that Congress would start to only tax the rich in an increased manner, but the November election scotched all of that. The Democrats and President Obama had not option but to deal with the marginal tax rates in this manner.

So what does all of this mean for you, for the tax brackets, for the marginal tax rates and for the year 2011? What it means is that these rules will remain as is for the next years as is and there will only be some minor changes made to the rates levied and standard deductions that can be claimed. And most of those changes are on account of inflation. What you need to be aware of are the changes in the tax brackets and so here they are without further ado.

• Each personal exemption or exemptions on account of dependents can now be made up to $3,700. That’s up by $50 from the 2010 limits.
• The standard deduction for married couples has increased too. It is now $11,600, up by $200.
• As for singles, that amount is $5,800. The increase for singles weighs in at $100.
• Any additional standard deduction (such as those made for blind people or senior citizens) can be put at $1,150 for individuals that are married and $1,450 for singles. Both are up by $50 from last year, factoring in inflation.
• Thresholds too have increased for each status that you are filing for. That is too say the taxable income threshold separating one class of taxation from the other has increased, widening brackets.

All of this compares quite favorably to 2009 and 2010, to be honest, but make sure your paperwork is all in order. You don’t want to be caught short at the last minute.