2009 Tax Tables, IRS Federal Income Tax Rates And Tax Brackets

By Pinyo, on July 17, 2009

The following article contains information about the Internal Revenue Service (IRS)’s officially released 2009 federal income tax brackets. You’ll need this information to prepare and file your 2009 tax return in early 2010. To the extent that the information in this article helps summarize the changes in Federal Income Tax, you should consult the official IRS.gov web site and a professional tax advisor as needed.

Official IRS Tax Rates Schedule For Tax Year 2009 versus 2008

The table below gives you the official marginal tax brackets for single, married couples filing jointly, qualifying widowers, married filing separately, head of household, as well as the long-term capital gains and qualified dividend tax rates. The income numbers listed are taxable incomes, and thus they have taken into consideration all available personal exemptions as well as any of either the standard or itemized deductions.

2009 Federal Income Tax Brackets

* Long-Term Capital Gains and Qualified Dividend

2008 Federal Income Tax Brackets

The previous year’s numbers are also provided to give you an idea of some of the changes.

* Long-Term Capital Gains and Qualified Dividend

How to Calculate Your Tax Liability

Before we highlight the changes, let’s take a moment to show you how to calculate your Federal income tax liability so that you can better understand how tax brackets work. Let’s look at the following example, suppose your taxable income (after deductions and exemptions) is exactly $100,000 in 2009 and your status is Single; then your tax would be calculated like this:

The $100,000 taxable income puts you in the 28% tax bracket, since that’s the highest rate applied to any of your income; but your effective tax rate as a percentage of $100,000 is 21.72%. Comparing 2008 tax rates, you are paying $258 less tax in 2009 for the same income.

Changes in Federal Income Tax Rate for 2009

The marginal tax rates are pegged to inflation and numbers are annually revised. Thus you will note that there are quite a few changes for the 2009 tax year compared to the year before. To summarize, here are some of the more notable tax rate changes for 2009 and even a quick blurb about some of the key tax benefits that did not change based on official IRS releases thus far:

• Tax-bracket thresholds: Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $67,900, up from $65,100 in 2008.
• Personal and dependency exemption: The value of each personal and dependency exemption, available to most taxpayers, is $3,650 (up $150 from 2008).
• Standard deduction: The new standard deduction is $11,400 for married couples filing a joint return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household (up $350). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.
• Earned income tax credit: The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $5,028, up from $4,824 (up $204). The income limit for the credit for joint return filers with two or more children is $43,415, up from $41,646 (up $1,769).
• Gift exclusion: The annual gift exclusion rises to $13,000, up from $12,000 in 2008 (up $1,000).
• Social Security Contribution and Wage Benefit Base: Increased to $106,800 from $102,000 (up $4,800). Income over $106,800 will not be subject to Social Security taxation, and at the current Social Security tax rate of 6.20%, the maximum Social Security taxes for 2009 is $6,621.60.
• Traditional and Roth IRA Contribution Limits: No change from 2008. The Traditional IRA and Roth IRA contribution limits will be staying the same at $5,000 per year for those under age 50, and $6,000 per year for those 50 or above.

Although the information in this article helps summarize the changes in Federal Income Tax, you should consult the official IRS.gov web site and a professional tax advisor as needed.

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Pinyo is the brain behind Moolanomy personal finance blog and a few other web sites. If you like this article, please subscribe for free daily email updates.

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