Federal Income Tax Bracket Tables and Standard Deduction Changes

See this article for the latest IRS tax brackets.

Federal Income Tax Rate and Brackets and various tax benefits will remain unchanged or change only slightly over 2009 levels as shown in the table below. Consumer Price Index (CPI) data released by the Bureau of Labor Statistics (BLS), used by the IRS in calculating 2010 tax parameters, has been reviewed by many tax experts and organizations with consensus estimates showing that the personal exemption amount, standard deduction, federal income-tax brackets and many other figures will barely change next year, Here are some notable changes reported which are important to factor into your 2010/2011 tax planning and setting of 2010 employer withholdings:

  • The personal exemption ($3,650) will remain unchanged for this year, along with the $5,700/$11,400 standard deduction for most taxpayers (except for a $50 increase for heads of household filers). This marks the first time that no increase in these parameters has taken place. 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.
  • Due to low levels of inflation over the last year (0.2%), most workers won’t receive as large an increase in take-home pay in January 2010 as they did last January given the automatic inflation adjustments (assuming pre-tax wages stay the same).
  • Various tax bracket thresholds will see minor adjustments. For example, for a married couple filing a joint return the taxable income threshold separating the 15 percent bracket from the 25 percent bracket is $68,000, up from $67,900 in 2009.

    – The annual gift-tax exclusion of $13,000 also won’t change. This means a person can give away as much as $13,000 each to anyone he or she wishes without any tax considerations. Many wealthy people take advantage of this provision each year as part of their estate-planning strategy. One can give away even more than the exclusion amount by paying someone else’s tuition or medical bills, but must make those payments directly to the medical or educational provider.

Indexing brackets lowers tax bills when there is inflation by including more of one’s income in a lower bracket, such as the 15% rather than the 25% bracket. The lack of change for 2010 creates a level playing field for taxpayers from all brackets, but those with high incomes actually stand to benefit in 2010 because “stealth taxes,” those that don’t involve changing tax rates, are being phased out. Among them are limits on itemized deductions and personal exemption amounts.

Taxpayer savings from inflation adjustments can vary tremendously, depending on an individual’s circumstances. A married couple filing jointly with total taxable income of $100,000 should pay $12.50 less in income taxes in 2010 than on the same income for 2009, compared with a $312.50 savings between 2008 and 2009. A single filer with taxable income of $50,000 should owe $6.25 less next year due to the adjustments, compared to a $156.25 savings with significantly higher inflation between 2008 and 2009.

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10 thoughts on “Federal Income Tax Bracket Tables and Standard Deduction Changes”

  1. My dad owns a property that is on the Historical Landmark Registry. It was once an income-producing investment. It has not been open for business at any time during 2010, however, he still paid BIGGGG real estate taxes. Since no revenue was generated, can the real estate taxes be deducted. Sch A or Sch C?

  2. In 2008 and 2009 when filing using standard deductions you could claim $500/$1000 additional for real estate taxes. What about 2010?

    • – Key Dates for 2010-2011 Tax season:

      * The IRS begins accepting e-file – January 11, 2011
      * W-2’s due to employees (unless IRS exemption provided) – January 31, 2011
      * Tax Filing Deadline or request for extension– April 18, 2011

  3. We bought all new Energy Star windows and New siding for our house — siding and window were ordered and paid for in December but not installed until January. Can we take the $1500 tax credit or do we lose it completely?

  4. Are you seriously kidding me? What makes you think that because you are in a “higher tax bracket” you are any smarter than someone in a lower bracket? What did they teach you in school may I ask? For your information, there are those of us in the “lower tax brackets” with Master’s degrees and Phd’s who do social service work for the service it gives to others not the money in our bank accounts. Maybe next time you decide to make a comment such as this you should use what you think of as a brain and figure it out. I can tell you that there are many people I know who make more money than some of us but are not what you would call smart. Obviously you may be included in that “bracket” of people.

  5. Can you confirm in simple terms whether the limit on itemized deductions (phase out) is not applicable in 2010? In other words, if gross income is greater than $166,800, I can still claim all my itemized deductions?

    Thanks in advance!


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