2009 Federal Income Tax Brackets

Written by Nickel - 17 Comments

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Every year around this time, the good folks over at the Wall Street Journal put together their income tax bracket projections for the next year. Because the personal exemption amount, standard deduction and marginal tax rates are all pegged to inflation, these amounts are all adjusted annually based on current inflation data.

While the IRS hasn’t yet released their official numbers, these numbers serve as a good approximation of how things will look next year. There is, of course, an additional variable in the mix this year: the recent Presidential election. So… Keep in mind that these projections apply to current marginal tax rates, which could be changing in the coming year(s).

2009 Federal Income Tax Brackets

The following graphic gives you the projected tax brackets for married couples filing jointly as well as single filers. As you can see, the numbers increased across the board. In other words, if these numbers hold up, your effective tax rate will drop a bit in 2009 thanks to our good friend, Mr. Inflation.

How much can you expect to save? The numbers vary with the particulars of your situation, but a married couple with a taxable income of $100k can expect to pay $312.50 less in federal income taxes in 2009. Again, this ignores the possibility of any major changes to our tax laws.

Other projected tax changes

In addition to changes in the tax brackets, the following changes are expected as a result of inflationary pressures:

  • The standard deduction will increase from $10,900 to $11,400 for married couples, and from $5,450 to $5,700 for single filers.
  • The personal exemption will increase from $3,500 to $3,650.
  • The gift tax exclusion will increase from $12,000 to $13,000.

Oddly enough, it appears that IRA contribution limits will be staying the same even though these numbers are also pegged to inflation. Of course, we’re still waiting on official word from the IRS, so it’s possible that these will end up changing, as well.

Closing thoughts

As they say, nothing is certain but death and taxes. Regardless of what the income tax brackets look like next year, you should start planning now to minimize your tax hit. Be aware (and take advantage) of the most common income tax deductions as well as those tax deductions that people commonly miss. Adopt tax efficient investment strategies. And be sure to take advantage of perks at work like a flexible spending account (FSA).

Source: WSJ.com

Published on November 13th, 2008 - 17 Comments
Filed under: Taxes
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About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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Comments (scroll down to add your own):

  1. Taxes are a very charged subject. I am a HUGE supporter of the Fair Tax (www.fairtax.org) and hope that some day something similar makes its way into reality. But, in the hear and now, I’ve found that a really great resource is a book titled “Lower Your Taxes Bigtime”. It’s full of tidbits that I really never knew, but plan to maximize for the current tax year.

    Thanks for the article. It was a good read.

    Comment by Momma — Nov 14th 2008 @ 9:30 am

  2. The image seems to return a 404/”Sorry dude” message. The “k” and “c” are transposed, but that still didn’t fix the error.

    Comment by Dave — Nov 14th 2008 @ 9:56 am

  3. Dave: Nice catch. Sorry about that. I’m embarrassed to admit that I forgot to upload the image!

    Comment by nickel — Nov 14th 2008 @ 2:02 pm

  4. Great article! I was linked here from get rich slowly… I am getting married soon and had not really given much thought to tax planning. The chart you posted inspired me to run some quick numbers – turns out that getting married will save us about 25% on our federal taxes! I thought that getting married was supposed to be bad for your taxes?

    Comment by Jade Cow — Nov 17th 2008 @ 7:58 pm

  5. Useful information and look forward to a fatter tax return next year. I have 2 tips on taxes for next year based on a recent post, make sure you take advantage of the new 401K limit (raised to $16K) and of the capital loss writeoff provision.

    Comment by andy — Nov 28th 2008 @ 12:04 pm

  6. Taxation is extortion.

    Comment by Alex — Dec 1st 2008 @ 1:40 pm

  7. what is or is there a amount of income i need it to make in able to geet my 2 dependents i have and do they geve money back if i went to college in 2008.
    thanks

    Comment by luis — Jan 23rd 2009 @ 7:06 pm

  8. I RECIEVED A PAYROLL CHECK FROM MY EMPLOYER WITH A GROSS AMOUNT OF 2500.00. I FILE SINGLE BUT IT APPEARS THAT MY EMPLOYER TOOK OUT 568.19 IN FEDERAL TAX, 155.00 FOR SS, 36.25 FOR MEDICARE, 130.38 FOR STATE TAX (NJ) AND 23.13 FOR SUI. COULD THIS BE CORRECT? THOSE DEDUCTIONS REPRESENT NEARLY 40% OF THE GROSS AMOUNT. ADDIDTIONALLY I DID NOT EARN OVER $3000.00 OVER THE ENTIRE TIME OF EMPLOYMENT.

    Comment by KELSEY MOORE — Mar 30th 2009 @ 10:22 am

  9. Kelsey,
    Each and every paycheck is treated as if you were making that amount every period during a year. (Typical pay period is for 2 weeks, so this amount on one paycheck is equivalent to a gross income of ~ $65k. The federal amount witheld equates to a 22% effective tax rate, which does not include Med or SSI. If you are doing a lot of single type high dollar gigs with one time payments, you may consider altering the exemptions you claim on your W-2 to alter how much federal tax is withheld. Another option is to claim exempt from the federal tax (I am not sure how this potentially affects medicare SSI etc) Then you can make estimated quarterly payments to your state and federal, or just pay when you actually do your taxes the following spring.

    Comment by Rob Arends — Apr 3rd 2009 @ 5:45 pm

  10. On my taxes with hold on our checks at our company the Federal tax has been witheld. Why is this and is it part of our bracket we are in??

    Comment by marsha — Apr 25th 2009 @ 9:36 am

  11. Just curious … we’re toying with the idea of pulling money out of an IRA to pay off our house. I was just checking the tax rate chart … and it wouldn’t put us in a higher tax bracket to do this. I know this goes against all “conventional” wisdom … but the $4300 in interest that we would save over the next 5 years is about the same as the $4000 “10 percent penalty for early withdrawal from the IRA” … yes we would pay taxes on the rest … but aren’t federal income taxes for 2009 the least that they will be many years? George W. Bush’s 2001 / 2003 tax cuts are set to expired after the 2010 tax year I believe?

    I’m thinking that the security of knowing our house is paid off in times when the government is printing money to keep everything afloat … may be the most prudent move.

    I hate to go against “conventional” wisdom … but we didn’t ride the stock market rollar coaster up and didn’t ride it down either … so maybe we should just take the plunge and be “unconventional”.

    Comment by Donna — Jul 17th 2009 @ 8:54 pm

  12. If the new proposed tax plan is put into effect will it be retro-active back to Jan 1 2009 or put into effect Jan 1 2010?
    Thanks!
    Steve

    Comment by Steve — Jul 20th 2009 @ 12:12 pm

  13. I am starting a new job and according to the above chart I would fall in the 25% fed tax bracket. My question is; does this 25% include SS & medicare or are there additional to the 25%? I know it does not cover state taxes. I’m trying to get a good idea for my monthly bring home after taxes for future planning. Thanks for your time.

    Comment by Gen — Aug 7th 2009 @ 1:18 pm

  14. Gen: No, this is Federal income tax only. Social Security and Medicare are a different beast.

    See here for details:

    http://www.fivecentnickel.com/.....sdi-taxes/

    Comment by Nickel — Aug 7th 2009 @ 1:42 pm

  15. i bought a chey truck this year. someone told me i could claim the tax on my 2009 return. Is this just if you idimise or where do you take the tax off?

    Comment by jim bertrand — Aug 8th 2009 @ 7:39 pm

  16. i just started a new job in indiana and i live in illinois and i grossed 645.49 on my biweekly pay and they only took out 3.97 for federal taxes im married and claim zero excepmtions but why didnt they take out very much when i asked my payroll dept they said that obama passed a new tax for married couples but that just doesnt seem like its enough. i dont want to have to pay at the end of the year

    Comment by Katherine — Aug 28th 2009 @ 12:49 am

  17. I work 33hrs. weekly at 11.40 p.h. my boss wants to give me the lead posion and a$0.20p.h raise but then told me he was doning some figureing and that the raise would put in in a new tax bracket and would not be worth it. I am single, no dependents. any truth to this?

    Comment by greg — Oct 17th 2009 @ 7:53 pm

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