Income Tax Brackets

We have all heard that death and Taxes are the only sure things in life. I challenge you to find an American that has rejoiced come tax time. So suck it up and grab your 1040s. Millions of Americans spend millions of hours filling out forms and trying to make out the enigmatic instructions and regulations that go along with the process. Through this process, Americans become painfully aware of how much of their money goes to federal accounts each year. Taxation comes to feel akin to extortion.

In 2009 however, there could be a bit of good news mixed in with the familiar bad. The Federal Income Tax Brackets experienced what the median family will come to feel as a positive change. For married couples filing jointly, the 25% bracket jumped up roughly $3k. So now couples making $65 and under will be paying %15 instead of the %25 they experienced last year. Average Joe’s family’s tax bracket just got a little more inclusive. Also, personal exemption and dependant exemption is up $150 from ’08 and for those who don’t like to itemize, the standard deduction had an increase $500 for couples with a joint filing and $250 for individuals.

Federal Income Tax Brackets

An Individual or couple filing separately can expect brackets similar to this in 2010. If your annual income is less than $8,375 your income tax will be %10, from $8,375 to $34,000 it will be %15, and for the $34,000 to $82,400 range a %25 income tax will apply. The last three brackets are as follows: $82,400-$171,850= %28; $171,850-$373,650= %33; and $373,650 and above= %35.

Joe Schmoe isn’t getting married anytime soon. So sitting in his one bedroom apartment, he will enjoy a tax of ($8375 x 10% = $837.50) + ($25575 x 15% = $3836.25) $4673.75 on his income if he makes $33,950 annually. Who knew there was such a huge tax penalty for being single?  Certain values seem to be promoted by our government. Ideally speaking, the tax code would not consider marriage; just income.  It’s also quite baffling to think that if you go from making $68,000 to $68,001 a year (married/jointly) your rate jumps 10%. Where else is a rate hike on the income tax table is that steep. Think about it: even jumping from $138,000 (the fourth bracket) a year to $373,000 (the final bracket) wouldn’t experience and increase of 10%. At this juncture, please refrain from boisterous outbursts of jubilation. 

Thanks to the low gas prices, depressed consumer spending, and high unemployment rates this past year inflation has stayed generally low. Income tax brackets are adjusted annually to account for changes in inflation. Because of all the economic unrest the nation has experienced this year, taxpayers will get virtually no significant benefit from the adjustment in 2010. It can be assumed that 2010 tax brackets, standard deductions and personal exemptions will not change too much from the last year’s numbers. Also bear in mind the Bush era’s tax cuts expire at the end of next year.