Standard deductions go up, but the ceiling for itemized deductions go down in 2013, plus other changes that will affect your taxes this year.
Tuesday, January 15
On Friday, the Internal Revenue Service announced annual inflation adjustments for tax year 2013, including the tax rate schedules, and other tax changes from the recently passed American Taxpayer Relief Act of 2012. The tax items for 2013 of greatest interest to most taxpayers include the following changes. Details on these inflation adjustments and others are contained in Revenue Procedure 2013-15, which will be published in Internal Revenue Bulletin 2013-5 on Jan.28, 2013. Other inflation adjusted items were published in October 2012 in Revenue Procedure 2012-41. -News release from the Internal Revenue Service
The main reason is the elimination of the payroll tax.
Despite the House and Senate reaching a Fiscal Cliff deal, 77 percent of Americans will pay more in taxes in 2013. That's because even though just 1 percent of households will pay higher income taxes, an increase in federal payroll taxes will hit nearly every wage earner, according to analysis by the Tax Policy Center. Individuals earning between $40,000 and $50,000 a year face an average tax increase of $579 in 2013, according to the Tax Policy Center's analysis. The average U.S. worker would pay $679 more in taxes this year under the fiscal cliff deal passed by the Senate early Tuesday morning, while the average member of the top 1 percent of earners would pay $73,633 more, according to Tax Policy Center analysis. The increases are …