It’s 2013, Do You Know What Your Annually Adjusted State Tax Bracket Is?


State individual income tax rates can affect all sorts of behavior during the tax year, such as where the taxpayer chooses to carry on business, or where he chooses to live. Annual indexed changes to other elements such as the standard deduction and personal exemption amounts can affect taxpayer’s deductible expenses or willingness to donate to charity.

But as a recent report by the Tax Foundation makes clear, finding this basic tax rate information on state tax department websites is difficult or impossible in some jurisdictions. Annual indexing adjustments to tax bracket amounts is another complicating factor.

Thirty-four states have statute-based income tax brackets which are not indexed and thus do not vary from year to year. While this may seem transparent, as taxpayers don’t have to worry about varying rates and can predict their tax liability in advance, there is a hidden downside to static tax brackets—inflation. 

As salaries increase with inflation, the fixed income brackets do not, causing taxes to go up disproportionately. This “bracket creep” is not always apparent to taxpayers, becoming a hidden tax increase that hides behind the often opaque wall of the tax code. 

However, even those states which recognize this problem and index for inflation must also be aware of the need for transparency in income tax brackets. The seventeen states which index income tax brackets for inflation publicize their rate changes at varying times in the year, as shown in the chart below. Often the rates are not published at the same time of year, or in the same format as the year before, leaving taxpayers confused and unsure about their tax liability for that year.

Below is a cheat sheet for those seeking to remain current on the latest state inflation adjustments.

For more information about the importance of indexing for inflation, see the August 2011 policy brief from the Institute on Taxation and Economic Policy (ITEP) .

States

Indexed Tax Brackets, Standard Deduction, and Personal Exemption

Indexed Personal Exemption Only

2012 Tax Information

2013 Tax Information

Notes

Arkansas

X

Estimated Tax Form – 1/13

California

X

Press Release – 8/12

2013 rates not yet released

Idaho

X

Website –April 2012

Estimated tax form not yet released

Uses personal exemption amounts provided by the federal code

Iowa

X

Tax Rate Schedule – 11/12

Maine

X

Tax Alert Publication – 10/11

Tax Alert Publication – 1/13

Massachusetts

X

Personal exemptions amounts have not changed since 2008

Michigan

X

Income Tax Return Form – 10/12

Not yet released

Minnesota

X

Press Release – 12/11

Press Release - 12/12

Uses personal exemption amounts provided by the federal code

Montana

X

2013 rates not yet released

2013 exemption amount released on 2013 estimated tax form

Nebraska

X

Estimated Tax Form – 12/11

Estimated Tax Form – 11/12

North Dakota

X

Estimated Tax Form – No date published

Uses personal exemption amounts provided by the federal code

Ohio

News Release – August 2012

Estimated Tax Form – 10/12

Oregon

X

Estimated Tax Form – 12/12

Rhode Island

X

Tax Advisory – 12/12

South Carolina

X

Estimated Tax Form – 9/12

Uses personal exemption amounts provided by the federal code

Vermont

X

Estimated Tax Form – No date published

Uses personal exemption amounts provided by the federal code

Wisconsin

X

Estimated Tax Form – 11/11

Estimated Tax Form – 1/13

By Melissa Fernley, chart by Martelli-Yndee Borieux

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