Income tax brackets, rates adjusted in Minnesota

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The Minnesota Department of Revenue announced today that the state’s individual income tax brackets for tax year 2012 will expand by 2.4 percent. State law requires the department to adjust the brackets to compensate for increases in inflation.

Expanding the brackets prevents taxpayers from paying higher taxes solely because of inflationary increases in their income. Since tax year 2000, Minnesota’s income tax brackets have expanded nearly 35 percent as a result of inflation.

The bracket adjustments are based on the change in the U.S. Consumer Price Index for all urban consumers for the average of the 12 months ending August 2011. The department adjusts the brackets each year by the inflation factor and rounds the result to the nearest $10.

The brackets apply to tax year 2012. Taxpayers who make quarterly payments of estimated tax should use the following rate schedule to determine their payments, which are due starting in April 2012. Minnesota’s tax rates remain the same.

2012 Minnesota Income Brackets and Marginal Tax Rates on Taxable Income:

5.35 percent

Married, filing jointly -- $0 to $34,590

Married, filing separately -- $0 to $17,300

Head of household --$0 to $29,130

Single -- $0 to $23,670

7.05 percent

Married, filing jointly -- $34,591 to $137,430

Married, filing separately -- $17,301 to $68,720

Head of household -- $29,131 to $117,060

Single -- $23,671 to $77,730

7.85 percent

Married, filing jointly -- $137,431 and more

Married, filing separately -- $ 68,721 and more

Head of household -- $117,061 and more

Single -- $ 77,731 and more

The marginal tax rate is the rate of tax paid on a particular range of incomes.

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