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Higher taxes for the rich: What they'll pay

chart_tax_difference6.top.gif By Blake Ellis, staff reporter


(CNNMoney.com) -- If you're a wealthy American, you've probably heard that your tax bill will be higher next year if President Obama has his way. But how much more are you really going to pay?

With Obama's tax plan in place, the cuts introduced during the Bush administration would lapse for the top two income brackets, resulting in a tax increase for the nation's richest taxpayers.

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That means people making more than $195,550 in taxable income ($200,000 in adjusted gross income) and joint filers with taxable income over $237,300 ($250,000 in adjusted gross income) would be pushed up from the current 33% and 35% tax brackets into 36% and 39.6% brackets next year.

"It comes down to the greater your earnings, the greater the tax hit," said Robert Kerr, senior director of government relations at the National Association of Enrolled Agents. "But it's all relative. For someone used to spending that money -- whether on a big family or expensive habits -- it's impossible to say how much they would be impacted."

How Uncle Sam's cut will change

While most people in the top two brackets would end up paying more if the cuts expire, some taxpayers at the very bottom of the new 36% tax bracket would actually end up paying less next year, according to estimates from the congressional Joint Committee on Taxation. That's because the lower tax rates, which high earners also pay on portions of their income, have been expanded.

For example, in the case of a person on the low end of the 36% bracket, only the highest sliver of income would be taxed at the new 36%, while larger portions are taxed at the broadened lower brackets, resulting in a net tax reduction.

Take someone with a taxable income of $210,000. Last year, they owed $54,000 in taxes (assuming one personal exemption and a basic standard deduction), but they would owe $53,512 under the new tax bracket, amounting to a $488 tax reduction, the JCT estimates showed.

But once taxable income exceeds about $240,000, you could end up owing anywhere from an additional few hundred dollars to hundreds of thousands of dollars in extra taxes depending on how much you make.

Say you're a single filer with a taxable income of $250,000. This year, you owed $67,617 in income tax under the 33% bracket. Under the new system, you would pay $67,912 in taxes next year, a slight increase of $295.

But those people making more than $300,000 are going to owe additional amounts in the thousands. For instance, if you make $382,650 you'll owe an extra $4,095 in income tax.

Single filers with $500,000 in taxable income would owe Uncle Sam an additional $9,492 from this year's tax bill. Meanwhile, joint filers with taxable income of $700,000 would owe $232,396 in 2011, an extra $17,088 from $215,308 in 2010.

Those Americans lucky enough to be earning millions each year, whether filing as individuals or jointly, could end up seeing increases in the six-figures.

A single filer with a million dollars in taxable income would owe $32,493 more than in 2010, While joint filers with the same income would owe $30,888 more than they paid in 2010.

For single filers making $5 million in taxable income, get ready to hand over $1,944,137 for the 2011 tax year, an increase of $216,493 from $1,727,644 in 2010.

And as a joint filer with an income of nearly $5 million in 2009, even Obama is likely to see his tax bill go up more than $200,000 next year.  To top of page

 
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