In the tax world the start of a new year means that last year’s tax laws will expire and new ones will take in to effect. Below are some tax law changes that became effective as of January 1st2012. Keep in mind that these changes apply only to 2012, so your 2011 return that you will file this year will be unaffected.
- The thresholds for 2012 Federal income tax-bracket have risen for each filing status. For example, for a married couple filing jointly, the threshold separating the 15% and 25% bracket has gone up to $70,700 from $69,000 for 2011.
- The standard deduction has also risen slightly. For singles, the basic deduction amount is $5,950, up from $5,800 last year. For married couples, the deduction amount has gone up to $11,900 from $11,600 in 2011.
- The maximum amount of the earned income tax credit for low and moderate workers and working families has is now $5,891 from $5,751 in 2011.
- The foreign earned income exclusion amount has gone up to $95,100 from $92,900.
- The mileage rate for using your car, van, pickup or panel truck for business will remain the same at 55.5 cents a mile. However, the rate of using your car for medical or moving purposes has gone down to 23 cents a mile, from 23.5 cents a mile in the second half of 2011. The rate set by Congress for using your car to provide services to charitable organizations is unchanged at 14 cents a mile.