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2009 Federal Income Tax Rates, Deductions & Exemptions
Indexing for inflation has become a settled part of our tax system, according to George Jones, JD, CCH senior federal tax analyst. "While some tax cuts in recent years are only temporary, and are scheduled to be followed by increases down the line, indexing works year after year, and it's likely to be a part of the tax law for the foreseeable future regardless of whether Congress plans to tinker more with the tax rates themselves," Jones noted. 2009 Indexing of income tax brackets lowers tax bills by including more of people's incomes in lower brackets -- in the 15-percent rather than the 25-percent bracket, for example. "This means that across-the-board inflation adjustments to the income tax brackets provide extra helpings of relief for those in the upper brackets, since they share in the reduction within each bracket, not just their own marginal tax bracket," Jones said. Two examples show the modest tax savings generated by indexing: -- Because of inflation adjustments, a married couple filing jointly
with total taxable income of
-- A single filer with taxable income of
Inflation Adjustments Since the late 1980s, the U.S. tax code has required that federal income tax brackets be adjusted for inflation annually, and inflation adjustments have been inserted into the Internal Revenue Code in recent years with increasing frequency. For example, the Code now requires over 50 other inflation-driven computations to determine deduction, exemption and exclusion amounts in addition to the 40 separate computations needed to inflation-adjust the tax bracket tables each year. Most adjustments are based on Consumer Price Index figures for
September through August immediately prior to the adjusted year.
However, some inflation-adjusted figures are computed earlier and some
later. For example, in May the IRS released the Health Savings Account
premium deduction limits for calendar year 2009: they are
Amounts such as the 2009 vehicle depreciation limits, however, won't
be available until 2009 (the
One new adjustment for 2009 potentially affects millions of
taxpayers, the so-called Code Sec. 219(b)(5) deductible amount allowed
for contributions to retirement savings accounts (typically, IRAs). But
while the deduction, that was
CCH's projections for other indexed amounts are based on the relevant
inflation data released
The IRS usually releases official numbers by December each year. CCH tax bracket projections are provided for illustrative purposes only, and should not be used for income tax returns or other federal income tax related purposes until confirmed by the IRS later this year. Some Items Not Indexed Jones observed that some items in the Code are not indexed for inflation and stay the same, while others rise by dollar amounts already written into the tax law. "The exemption amounts for the alternative minimum tax are not indexed, which means that each year Congress must either increase the amounts by statute or expose additional households to the AMT," Jones said. In 2007, Congress set the AMT exemption amounts at
Standard Deduction, Personal Exemption Also Rise The standard deduction and personal exemption amounts are also subject to indexing and these are projected to increase for 2009. These increases can produce lower taxes by lowering the taxpayer's taxable income. Single taxpayers and married taxpayers filing separately could see a
The additional standard deduction for those age 65 or older or who
are blind, will rise
These inflation adjustments can add up over time. For example, since
the 1989 tax year, the standard deduction for joint filers has more than
doubled, from
Taxpayers can, however, lose a good portion of the value of personal exemptions and itemized deductions when their incomes rise above certain levels. Those "phaseout" levels are also adjusted for inflation. For 2009,
married couples filing jointly will begin to lose some of the value of
any itemized deductions when their adjusted gross income exceeds
For 2009, the reduction in personal exemptions and itemized deductions is scheduled to be only one-third of what it was in 2005. That's because both "phaseouts," first started under the Revenue Reconciliation Act of 1990, are themselves being phased out -- by one-third in 2006 and 2007, two-thirds in 2008 and 2009 and completely repealed for 2010. For a complete look at how income ranges for each tax bracket are projected to shift next, see the attached CCH chart. "Kiddie" Deduction, Gift Tax Exemption In general, inflation adjustments are rounded to the next-lower
multiple of
For 2006, it increased to
The Code only allows the gift tax exemption to rise when the
inflation adjustment would produce an increase of
About CCH, a Wolters Kluwer business
CCH 2009 TAX PROJECTIONS(1)
Married Filing Jointly (& Surviving Spouse)
2009 Taxable Income Tax Rate 2008 Taxable Income Tax Rate
$0 - $16,700 10% $0-$16,050 10%
$16,700-$67,900 15% $16,050-$65,100 15%
$67,900-$137,050 25% $65,100-$131,450 25%
$137,050-$208,850 28% $131,450-$200,300 28%
$208,850-$372,950 33% $200,300-$357,700 33%
$372,950 + 35% $357,700 + 35%
Married Filing Separately
2009 Taxable Income Tax Rate 2008 Taxable Income Tax Rate
$0-$8,350 10% $0-$8,025 10%
$8,350-$33,950 15% $8,025-$32,550 15%
$33,950-$68,525 25% $32,550-$65,725 25%
$68,525-$104,425 28% $65,725-$100,150 28%
$104,425-$186,475 33% $100,150-$178,850 33%
$186,475 + 35% $178,850 + 35%
Single Filers
2009 Taxable Income Tax Rate 2008 Taxable Income Tax Rate
$0-8,350 10% $0-$8,025 10%
$8,350-$33,950 15% $8,025-$32,550 15%
$33,950-$82,250 25% $32,550-$78,850 25%
$82,250-$$171,550 28% $78,850-$164,550 28%
$171,550-$372,950 33% $164,550-$357,700 33%
$372,950 + 35% $357,700 + 35%
Head of Household
2009 Taxable Income Tax Rate 2008 Taxable Income Tax Rate
$0-$11,950 10% $0-$11,450 10%
$11,950-$45,500 15% $11,450-$43,650 15%
$45,500-$117,450 25% $43,650-$112,650 25%
$117,450-$190,200 28% $112,650-$182,400 28%
$190,200-$372,950 33% $182,400-$357,700 33%
$372,950 + 35% $357,700 35%
Standard Deduction Amounts
Filing Status 2009 2008 Increase
Married Filing Jointly
(& Surviving Spouse) $11,400 $10,900 $500
Married Filing Separately $5,700 $5,450 $250
Single $5,700 $5,450 $250
Head of Household $8,350 $8,000 $350
Standard Deduction for Dependents ("Kiddie" Standard Deduction)
2009 2008 Increase
$950 $900 $50
Income Level at Which 3-Percent Itemized Deduction
Limitation Takes Effect (Adjusted Gross Income)
Filing Status 2009 2008 Increase
Married Filing Jointly
(& Surviving Spouse) $166,800 $159,950 $6,850
Married Filing Separately $83,400 $79,975 $3,425
Single $166,800 $159,950 $6,850
Head of Household $166,800 $159,950 $6,850
Personal Exemption Amounts
2009 2008 Increase
$3,650 $3,500 $150
Threshold for Personal Exemption Phaseout
Filing Status 2009 2008 Increase
Married Filing Jointly
(& Surviving Spouse) $250,200 $239,950 $10,250
Married Filing Separately $125,100 $119,975 $5,125
Single $166,800 $159,950 $6,850
Head of Household $208,500 $199,950 $8,550
Gift Tax Exemption
2009 2008 Increase
$13,000 $12,000 $ 1,000
Income Limit for Full Roth IRA Contribution
Filing Status 2009 2008 Increase
Married Filing Jointly $166,000 $159,000 $7,000
Single $105,000 $101,000 $4,000
1.) These numbers are projected for the 2009 tax year and have not been
confirmed by the Internal Revenue Service.
SOURCE CCH, a Wolters Kluwer business <<PR Newswire -- 09/18/08>>
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