2014 tax brackets have been released by the IRS. Tax rates have changed this year, with the annual adjustment for inflation. In addition, there’s a new tax bracket at the top tier: 39.6%.
Tax Tables vs. Tax Brackets
Tax tables are used to look up how much tax you owe once you have calculated your taxable income. Tax brackets are something different: they show the different tax rates for varying income levels.
Both are, however, adjusted annually for inflation. That is, the tables and brackets shift upwards slightly, to keep pace with rising income due to inflation. This is called the Annual Inflation Adjustment
Other Annual Inflation Adjustments for 2014
- For tax year 2013, the standard deduction is going to be $6,100 if you are filing as an individual and $12,200 for married filing jointly.
- The personal exemption will be $3,900 for 2014 (tax year 2013)
- For people who make more than $250,000 a year, personal exemption will be reduced and for people who make more than $372,500 there will be no personal exemption at all. This is totally new, a result of the the American Taxpayer Relief Act of 2012.
- The Alternative Minimum Tax exemption amount goes to $51,900 and will be from now on adjusted annually for inflation. This is also totally new and a result of the American Taxpayer Relief Act of 2012.