Taxpayer Alert: Who Pays the 35%

Photograph by Emmanuel Dunand/AFP via Getty Images

Occupy Wall Street protestors stage a 'Millionaires March' in Manhattan's Upper East Side, one the city's wealthiest residential neighborhoods.

What’s narrow and home to thousands of wealthy individuals?

Here are two possible answers: Manhattan and the 35 percent income tax bracket.

The 35 percent bracket had been the top of the charts for the past few years — until the tax law passed by Congress last week that reset the top rate to 39.6 percent for 2013.

That law didn’t, however, replace the 35 percent bracket. Instead, Congress squeezed it into a tiny space between the 33 and 39.6 percent thresholds, where it will reside, increasing each year for inflation.

For individuals, the bracket for 2013 is quite narrow — the 35 percent rate will apply to taxable income between $398,350 and $400,000, according to the Joint Committee on Taxation.

The sixth-highest of seven brackets is a bit wider for married couples, who will pay 35 percent on income between $398,350 and $450,000.

 

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