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The current income tax rates will be retained for 2011 and 2012 with a top rate of 35% on ordinary income, and 15% on qualified dividends and long term capital gains. Tax bracket ranges and standard deduction levels have increased slightly due to inflation. The exemption amount on the alternative minimum tax will remain $72,450 for married filing joint, $47,450 for single and head of household, and $36,225 for married filing separate for 2011.
The making work pay credit (maximum of $400 per person) expired in 2010, and payroll withholding tables have been adjusted accordingly.
The Illinois individual income tax rate has increased from 3% to 5% in 2011, which has also been adjusted in Illinois payroll withholding tax tables. In 2011 only, the social security withholding rate (as well as the self-employment tax rate) has decreased by 2%, so employees may not notice the Illinois withholding increase until 2012.
The minimum wage in the state of Illinois is $8.25 per hour.
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Single 2011 Tax Brackets
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Taxable Income
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Marginal Tax Rate:
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$0-$8,500
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10%
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$8,500-$34,500
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15%
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$34,500-$83,600
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25%
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$83,600-$174,400
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28%
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$174,400-$379,150
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33%
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$379,150+
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35%
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Married Filing Jointly 2011 Tax Brackets
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Taxable Income
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Marginal Tax Rate:
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$0-$17,000
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10%
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$17,000-$69,000
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15%
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$69,000-$139,350
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25%
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$139,350-$212,300
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28%
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$212,300-$379,150
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33%
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$379,150+
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35%
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Head of Household 2011 Tax Brackets
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Taxable Income
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Marginal Tax Rate:
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$0-$12,150
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10%
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$12,150-$46,250
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15%
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$46,250-$119,400
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25%
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$119,400-$193,350
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28%
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$193,350-$379,150
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33%
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$379,150+
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35%
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Married Filing Separately 2011 Tax Brackets
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Taxable Income
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Marginal Tax Rate:
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$0-$8,500
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10%
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$8,500-$34,500
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15%
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$34,500-$69,675
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25%
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$69,675-$106,150
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28%
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$106,150-$189,575
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33%
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$189,575+
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35%
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- The $1,000 child tax credit and American Opportunity tax credit (college credit) both remain refundable through 2011.
- The option to deduct sales taxes instead of state income taxes, and the deduction up to $250 for unreimbursed expenses of elementary and secondary school teachers both will remain in effect for 2011.
- The estate tax has been reinstated for 2011 and 2012 with a top rate of 35%, and an exemption amount of $5 million per individual.
- Businesses may deduct 100% of their new equipment and machinery purchases through 2011 up to a maximum of $500,000 (with certain limits)
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- The standard mileage rate for 2011 is 51 cents per mile.
- Contributions to Health Savings Accounts up to $3,050 ($6,150 for family coverage) in 2011, and $3,100 ($6,250 for family coverage) in 2012 may be deducted. To qualify for a Health Savings Account, the minimum annual deductible of your health plan must be $1,200 ($2,400 for family coverage).
- The home energy credit is still available, but is reduced for 2011. A credit for 10% of the cost up to $500 may be deducted. See www.energystar.gov for further details on products that qualify for the energy credit.
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Individuals with 401(k), 403(b), or 457 retirement plans may defer up to $16,500 from their wages in 2011. If the individual is over age 50 by year end, they may defer an additional $5,500 from their wages up to $22,000. Individuals participating in a Simple IRA plan may contribute $11,500 for 2011, and an additional $2,500 if they are over age 50 by the end of the year. Individuals may contribute up to $49,000 into a SEP plan in 2011. Traditional and Roth IRAs may be funded up to $5,000 in 2011, plus an additional $1,000 if the participant is over age 50 by the end of the year. There are income phase out amounts, so check with us to make sure you are eligible before making a traditional or Roth IRA contribution. The due date to make 2011 IRA contributions is April 16, 2012, so you may wish to wait and have your tax return for 2011 prepared before making an IRA contribution.
As a reminder, retirees must generally take a required minimum distribution from their retirement accounts in the year they turn 70 ½ and each year after that.
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Caufield & Flood 407 Congress Parkway Crystal Lake, Illinois 60014 815-455-9538
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