Alert
Close

Think you know AARP? What you don't know about us may surprise you. Discover all the 'Real Possibilities'

Highlights

Open

You and Your Town Contest-You could win an AARP RealPad

AARP Auto Buying Program

Contests and
Sweeps

$10,000 Winter Escapes Sweepstakes

Beat the cold and cozy up to a chance of winning $10,000! See official rules.

Driver Safety

Piggy bank on the road - AARP Driver Safety

Take the new AARP Smart Driver Course!

AARP Books

Visit the Money Section

Enjoy titles on retirement, Social Security, and becoming debt-free.

Jobs You Might Like

most popular
articles

Viewed

What's New for Taxes in 2012?

Expanded 401(k) contributions, other changes may reduce your taxes

En español | Changes in federal taxes for 2012 are wide-ranging and may result in lower tax bills for many taxpayers. Since the 1980s, the federal tax code has required adjustments to compensate for inflation, which was 3.9 percent in the last 12 months.

See also: Cut your taxes for 2011.

Here's a rundown of the some of the most important changes that may affect you:

  • Exemption. The personal and dependent exemption will increase to $3,800, from $3,700.
  • Tax brackets. The thresholds for tax brackets will increase. For a married couple filing jointly, the point at which the 15 percent bracket moves up to 25 percent will rise to $70,700, up from $69,000 in 2011. For single filers, the 25 percent bracket will start at $35,350, up from $34,500 in 2011.

    As a result of the tax bracket changes, a married couple with taxable income of $100,000 filing jointly would pay about $190 less in federal income tax. Single filers will enjoy similar reductions.
New tax deductions guidelines in 2012- uncle sam holding a can with coins in it

What tax changes did Uncle Sam make that could save you money in 2012? — Photo by: Peter Gridley/Getty Images

  • Standard deductions. Filers taking the standard deduction will benefit from increases in all filing categories. For example, the standard deduction for a married couple filing jointly will increase by $300. For single filers and married couples filing separately, the standard deduction will increase by $150. According to the IRS, about two out of three taxpayers claim the standard deduction.
  • 401(k)s. The maximum allowable contribution to 401(k) pension plans without the need to pay upfront taxes increases from $16,500 in 2011 to $17,000 for 2012.


This is the first increase in the maximum contribution since 2009 because inflation had been too low to trigger an increase. The increase also applies to 403(b) plans, most 457 plans and the federal government's Thrift Savings Plan.

Of course, not everyone is in a position to make the maximum allowable contribution. "In that case," says Jean Setzfand, vice president of financial security at AARP, "at the very least, you should contribute as much as your employer is willing to match."

Next: Roth IRAs, EITC. >>

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts

Processing

Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.

The Cheap Life

Jeff Yeager Cheap Life Ultimate Cheapskate AARP YouTube web series save money

Catch the latest episode of The Cheap Life starring Jeff Yeager, AARP's Ultimate Cheapskate. Watch

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

Life insurance: you are covered rain or shine

Exclusive annuities for members from AARP Lifetime Income Program from New York Life.

AARP Credit card from Chase

Members can get cash back rewards on purchases with the AARP® Credit Card from Chase.

Homeowners Insurance
Member Benefits

Join or renew today! AARP members receive exclusive member benefits & affect social change.

Rewards for Good

Your Points Balance:

Learn More

Earn points for completing free online activities designed to enrich your life.

Find more ways to earn points

Redeem your points to save on merchandise, travel, and more.

Find more ways to redeem points