The following information is reprinted with permission from Forefield, Inc.
The year was 2001. The top marginal federal income tax bracket was 39.6%, and the tax rate that applied to most long-term capital gains was 20%. Then came the Economic Growth and Tax Relief Reconciliation Act of 2001, followed two years later by the Jobs and Growth Tax Relief Reconciliation Act of 2003. By mid-2003, the top marginal tax rate was 35%, and the 20% capital gains rate had dropped to 15%. But this tax relief was designed to be temporary–the provisions that established lower rates were crafted to self-expire after a period of time. And now, in 2010, we’re only months away from seeing those provisions expire.
Federal income tax brackets
Right now, there are six marginal income tax brackets: 10%, 15%, 25%, 28%, 33%, and 35%. For 2010, these brackets apply to married couples filing joint federal income tax returns in the following manner:
| 2010 Marginal Income Tax Brackets | |
|---|---|
| Married Filing Jointly | |
| Taxable Income | Marginal Tax Rate |
| Not over $16,750 | 10% |
| Over $16,750 to $68,000 | 15% |
| Over $68,000 to $137,300 | 25% |
| Over 137,300 to $209,250 | 28% |
| Over 209,250 to $373,650 | 33% |
| Over $373,650 | 35% |
As it stands now, these marginal tax brackets will expire at the end of 2010. There would be no 10% bracket for 2011, and the remaining bracket rates would return to their original 2001 levels: 15%, 28%, 31%, 36%, and 39.6%.