The tax season for 2010 has begun and it is already time to start worrying about your tax situation for 2011. Knowing the income tax brackets early in the year will be useful in planning your personal finances for the rest of 2011.

A few months ago, American taxpayers were unsure how the tax situation would change in 2011 as Congress deliberated its actions on the expiring Bush-era tax cuts.

Lingering high unemployment and uncertain economic recovery played influential roles in the ultimate decision to leave federal income tax rates unchanged.

The Bush-Era Tax Cuts Extension

In mid-December 2010, Obama signed a bill that extended the Bush-era tax cuts for two more years. As a result, the 2011 federal income tax rates are essentially same as the tax rates of 2010. If you took a careful look at the 2011 and 2010 federal income tax brackets above, you’ll notice that the IRS tax rates have risen very slightly though — adjusted rightly so in accord with inflation.

Had President Obama allowed the Bush-era tax cuts to expire, the average taxpayer would be receiving roughly $3,000 less in post-tax income. The top income bracket would have been hit with a tax rate of 39.6% while the bottom income bracket tax rate of 10% would have been eliminated.

Compare the 2011 IRS income tax brackets and the 2010 IRS income tax brackets below:

2011 IRS Income Tax Brackets

Tax rateMarried, filing jointly or qualified widow(er)SingleHead of householdMarried, filing separately
10%$0 - 17,000$0 - 8,500$0 - 12,150$0 - 8,500
15%$17,001 - 69,000$8,501 - 34,500$12,151 - 46,250$8,501 - 34,500
25%$69,001 - 139,350$34,501 - 83,600$46,251 - 119,400$34,501 - 69,675
28%$139,351 - 212,300$83,601 - 174,400$119,401 - 193,350$69,676 - 106,150
33%$212,301 - 379,150$174,401 - 379,150$193,351 - 379,150$106,151 - 189,575
35%over $379,150over $379,150over $379,150over $189,575

2010 IRS Income Tax Brackets

Tax rateMarried, filing jointly or qualified widow(er)SingleHead of householdMarried, filing separatelyTax RateMarried, filing jointly or qualified widow(er)SingleHead of householdMarried, filing separately
10%$0 - 17,000$0 - 8,500$0 - 12,150$0 - 8,50010%$0 - 16,750$0 - 8,375$0 - 11,950$0 - 8,375
15%$17,001 - 69,000$8,501 - 34,500$12,151 - 46,250$8,501 - 34,50015%$16,751 - 68,000$8,736 - 34,000$11,951 - 45,550$8,736 - 34,000
25%$69,001 - 139,350$34,501 - 83,600$46,251 - 119,400$34,501 - 69,67525%$68,001 - 137,300$34,001 - 82,400$45,551 - 117,65034,001 - 68,650
28%$139,351 - 212,300$83,601 - 174,400$119,401 - 193,350$69,676 - 106,15028%$137,301 - 209,250$82,401 - 171,850$117,651 - 190,550$68,651 - 104,625
33%$212,301 - 379,150$174,401 - 379,150$193,351 - 379,150$106,151 - 189,57533%$209,251 - 373,650$171,851 - 373,650$190,551 - 373,650$104,626 - 186,825
35%over $379,150over $379,150over $379,150over $189,57535%over $373,650over $373,650over $373,650over $186,825

According to the IRS, these are some notable changes that will affect 2011 tax returns:

  • The value of each personal and dependent exemption, available to most taxpayers, is $3,700, up $50 from 2010.
  • The new standard deduction is $11,600 for married couples filing a joint return, up $200, $5,800 for singles and married individuals filing separately, up $100, and $8,500 for heads of household, also up $100. The additional standard deduction for blind people and senior citizens is $1,150 for married individuals, up $50, and $1,450 for singles and heads of household, also up $50. Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.
  • Tax-bracket thresholds increase for each filing status after adjustments for inflation.
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