What your tax rates might look like

Right now I know you're focused on your 2009 tax filing, due April 15, which means you're concerned about what tax bracket last year's income fell into.

And then there's your 2010 tax planning. For that, you need to pay attention to the 2010 tax rates and income brackets.

But for those of you who really, really like to plan ahead or want to have something else to worry about, check out this very interesting table detailing the expected top tax rates for various types of income at this time next year.

Yep, that's what could, might, is expected to happen on Jan. 1, 2011, after Dubya's tax rate cuts expire at the end of 2010. Thanks to the folks at Grant Thornton for putting such bad news for many in such a nice format.

The rest of the 2011 tax story: Below is a bit more info on exactly what is on tap tax-wise on 01.01.11.

• Individual income tax rates will go from
      10%, 15%, 25%, 28%, 33% and 35% to
      15%, 28%, 31%, 36% and 39.6%.
• Capital gains tax rates that currently are 0% and 15% depending on a taxpayer's adjusted gross income revert back to 10% and 20%.
• Qualified dividends now taxed at the lower capital gains rates will once again be taxed at higher ordinary income rates. See
  that first bullet point.
• The Child Tax Credit falls from $1,000 per kiddo to $500 per child.
  
• The estate tax will be fully reinstated at pre-phaseout levels, meaning a 55% tax rate and an exemption of just $1 million. 

Congress could act. Really: Now of course, Congress could act on these expiring taxes. But sometimes life gets in the way.

During the presidential campaign, it
looked like Obama was ready to snap the higher rates into place this
year. Then the economy collapsed and tax hikes wasn't such a good idea.

Now we're into 2010. The economy is
sorta picking up, but it's now an election year for most of
Washington's lawmakers. And no politician wants to see taxes go up when
folks are on their ways to the voting booth.

Plus, I have three words for you:
Extenders, Estate Tax.

Just last month these languishing bills became incontrovertible
evidence of that bad Capitol Hill habit of letting legislation run down
to the last possible moment.

So what's going to happen? Who knows.
My best guess right now is that the 10 percent rate will  stick around,
as will the 15 percent one, which will continue to be wide enough to
take care of some marriage tax penalty problems.

The top rate might not
go back to almost 40 percent, but it probably will creep up a point or
two.

I suspect capital gains rates are
likely to revert to the previous levels. Since most folks who can take
advantage of the lower rates tend to be higher income earners, that
will give some politicians some cover.

The Child Tax Credit will not be cut in half. I'll guarantee that one.

And I'll bank on the estate tax being back in
place with a larger exemption and lower rate than the 2011 figures
before this year is over. Of course, I thought the estate tax would be a done deal long before now.

So as to how quickly the estate tax will be resurrected, I won't venture a guess!
We are, after all, talking Congress.

Related posts: 

• Congressional tax wrap-up
• Senate pulls the estate tax plug
• House OKs extending tax breaks
• A look back at the decade in taxes

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