The expiration of the Bush-era tax cuts would have a significant effect on taxpayers at all income levels

The expiration of the Bush-era tax cuts would have a significant effect on taxpayers at all income levels — including the lowest-earning Americans.

The Bureau of Labor Statistics recently released its August 2012 consumer price index figure, typically the final piece of information required to determine next year’s federal income tax brackets, the Tax Foundation explained.

“Projecting 2013’s brackets is more complicated than usual given the uncertainty surrounding the potential expiration of the Bush cuts, originally enacted in 2001 and 2003, and more recent stimulus bill tax cuts originally passed in 2009,” the Foundation observes.

“But since tax parameters are adjusted for inflation in more or less the same way, the Tax Foundation can project next year’s parameters under a variety of scenarios with a high degree of certainty.”

With the Bush cuts in place, lower-income married joint filers pay a rate of 10 percent up to earnings of $17,900. But if the cuts expire, they would be boosted into the 15 percent bracket, which extends all the way to earnings of $60,550.

Taxpayers earning from $72,500 to $146,400 currently pay at a rate of 25 percent. Without the Bush cuts, earnings up to $146,400 will be taxed at the rate of 28 percent.

The 28 percent bracket currently covers married joint filers earning from $146,400 to $223,050. Without the cuts, their rate will rise to 31 percent.

Similarly, the current 33 percent bracket will increase to 36 percent without the Bush cuts, and the top bracket, 35 percent, will rise to 39.6 percent for those earning $398,350 or more.

Single filers and head of household filers will see comparable tax increases if the Bush-era cuts are allowed to expire next year.

Under President Obama’s 2013 budget, the cuts would expire only for those earning $247,000 or more.

Expiration of the cuts would also affect the standard deduction for married filers and the Earned Income Tax Credit, among other factors.