The 2011 tax year is one that has as lot of things yet to be determined. Where the tax rates will fall is anybody's guess – even if we can make a pretty good guess.
UPDATE: After the Bush era tax rates were extended in December 2010, the 2011 tax rate tables were released. You can view them at the bottom of the page
There are a couple of things that could help to determine where the tax brackets fall. What happens in these situations will determine where they end up.
- The Bush tax cuts expiring. The Bush tax cuts will expire at the end of the year if they aren't renewed by Congress. If they do, everyone's rates will go up.
- Obama administration wants to renew tax cuts for lower brackets: If Obama gets his way, the tax cuts will expire for high income earners as was proposed in the 2010 budget. Whether the Republicans will go along with an extension only for some brackets remains to be seen!
Quite a few groups have put out what they believe the tax rates will look like in 2011. Here is one put out by the Tax Policy Center that looks pretty close to what most of them have.
| 2011 Tax Brackets ( If Tax Cuts Are Renewed For Some - Obama's Plan) | Single | Married Filing Jointly |
|---|---|---|
| 10% Bracket | $0 - $8,425 | $0 - $16,850 |
| 15% Bracket | $8,426 - $34,200 | $16,851 - $68,400 |
| 25% Bracket | $34,201 - $82,850 | $68,401 - $138,050 |
| 28% Bracket | $82,851 - $192,000 | $138,051 - $232,950 |
| 36% Bracket | $192,001 - $375,700 | $232,951 - $375,700 |
| 39.6% Bracket | $375,700+ | $375,700+ |
Of course, if they aren't able to get anything done, the tax rates will go up for everyone. Then the rates will look like this:
| 2011 Tax Brackets (If Bush Tax Cuts Expire) | Single | Married Filing Jointly |
|---|---|---|
| 15% Bracket | $0 - $8,500 | $0 - $17,000 |
| 15% Bracket | $8,500 - $34,550 | $17,000 - $57,700 |
| 28% Bracket | $34,550- $83,700 | $57,700 - $139,500 |
| 31% Bracket | $83,700 - $174,650 | $139,500 - $212,600 |
| 36% Bracket | $174,650 - $379,650 | $212,600 - $379,650 |
| 39.6% Bracket | $379,650+ | $379,650+ |
So you can compare, here are the 2010 tax brackets:
| 2010 Tax Brackets | Single | Married Filing Jointly |
|---|---|---|
| 10% Bracket | $0 – $8,375 | $0 – $16,750 |
| 15% Bracket | $8,375 – $34,000 | $16,750 – $68,000 |
| 25% Bracket | $34,000 – $82,400 | $68,000 – $137,300 |
| 28% Bracket | $82,400 – $171,850 | $137,300 – $209,250 |
| 33% Bracket | $171,850 – $373,650 | $209,250 – $373,650 |
| 35% Bracket | $373,650+ | $373,650+ |
So based on the assumption that most are making that the tax cuts will be extended for some, but not for those making over $250,000, the tax rates for next year should look like the first table above. That would mean the following changes to the tax rates for 2011.
- 39.6 percent tax rate reinstated for 2011
- The 33 percent tax rate would increase to 36 percent and the thresholds for that tax bracket would also change for 2011.
UPDATE: After the Bush era tax rates were extended this month, the 2011 tax rate tables were released. Since the tax cuts were extended for everyone, the tax rates will remain essentially unchanged except for some change in the ranges due to inflation.
| 2011 Tax Brackets | Single | Married Filing Jointly |
|---|---|---|
| 10% Bracket | $0 – $8,500 | $0 – $17,000 |
| 15% Bracket | $8,500 – $34,500 | $17,000 – $69,000 |
| 25% Bracket | $34,500 – $83,600 | $69,000 – $139,500 |
| 28% Bracket | $83,600 – $174,400 | $139,500 – $212,300 |
| 33% Bracket | $174,400 – $379,150 | $212,300 – $379,150 |
| 35% Bracket | $379,150+ | $379,150+ |
Tell us your thoughts on the 2011 tax rates in the comments.
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