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Federal Tax Brackets 2009

Published 4/22/09 (Modified 6/17/11)
By MoneyBlueBook

Federal Tax Brackets 2009

Update: Projected Have Been Released!

The following represents the Internal Revenue Service (IRS)'s officially released 2009 federal income tax brackets. Read 'em and weep - or perhaps rejoice, depending on where you stand on the whole federal income tax bracket sliding scale. Regardless, you're going to be getting close and personal with the marginal rates when you file your 2009 tax return in early 2010. Let's have a look at some of the tax changes shall we?

Official IRS Tax Rate Schedule Updates For Tax Year 2009

Via the Wall Street Journal, the following graphical table below gives you the official marginal tax brackets for married couples filing jointly as well as the marginal rates for single filers for 2009. The previous year's numbers are also provided to give you an idea of some of the more noticeable changes since 2008. The income numbers listed in the chart below 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, including all pre-tax above the line 401k and deductible IRA contributions.

As key portions of the marginal tax tables are pegged to inflation, quite a few numbers must be annually revised. Thus you will note that there are quite a few key changes for the 2009 tax year compared to the year prior. However, while overall tax numbers appear to have nominally increased on the whole, taking into consideration the effects of inflation, effective tax rates may actually have remained level or even dipped a bit.

Despite the text below that says "projected", the official IRS numbers have been released and they now represent official federal income tax rate brackets, locked in for 2009.

To summarize, here is a run through of 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:

  • Personal Exemption and Exemption For Dependents - Increased to $3,650 from $3,500 (up $150) from 2008, but is phased out at higher income levels.
  • Standard Deduction - The great majority of American taxpayers take the standard deduction rather than itemizing deductions for expenditures such as mortgage interest, charitable contributions, and state & local taxes. The standard deduction increased to $11,400 from $10,900 (up $500) for married couples filing a joint tax return, increased to $5,700 from $5,450 (up $250) for singles and married individuals filing separately, and increased to $8,350 from $8,000 (up $350) for heads of household.
  • Overall Tax Bracket Thresholds - Increased across the board for all tax filing statuses. This means that if your annual income did not increase since last year or if you did not receive an inflation based pay raise, you may likely pay a little less in taxes in 2009 than in 2008. As the IRS notes as an example on one of its press releases, in regards to a married couple filing a joint return, the taxable income threshold separating the 15 percent bracket from the 25 percent bracket is $67,900, up from $65,100 compared to tax year 2008.
  • Earned Income Tax Credit - Increased to $5,028 from $4,824 (up $204) for low and moderate income workers and working families with two or more children. The income qualification limit to take the earned income tax credit (EITC) for joint return filers with two or more children also increased to $43,415 from $41,646 (up $1,769).
  • Annual Gift Tax Exclusion Amount - Increased to $13,000 from $12,000 in 2008 (up $1,000). Often overlooked by people, the gift tax requires the gift giver to pay a special tax on the gift amount if it exceeds a certain amount per year. For 2009, that threshold will be bumped to $13,000.
  • Social Security Contribution and Wage Benefit Base - Increased to $106,800 from $102,000 (up $4,800). This means that 2009 income sources over $106,8000 will not be subject to Social Security taxation. With the Social Security tax rate at 6.20%, this also means that the maximum a person will shoulder in Social Security taxes for 2009 is $6,622.
  • Traditional and Roth IRA Contribution Limits - No change from 2008. Despite inflationary pressures that increased tax bracket rates across the boards, sadly, IRA and Roth IRA contribution limits will be staying the same - stuck at a crappy and paltry $5,000 per year for those under age 50, and $6,000 per year for those 50 or above.
  • Roth IRA Contribution Limits (Income Threshold) - Increased to $166,000 from $159,000 (up $7,000) for married filing jointly couples, and increased to $105,000 from $101,000 (up $4,000) for singles and others.

Watch Out For Possible Upcoming 2010 Tax Bracket and Tax Rate Changes

While official IRS federal income tax brackets are not usually released for the following tax year until the late fall, it's frankly never too soon to get your hands on the earliest reliable marginal tax bracket predictions. Year after year, a group of private tax experts and economists associated with the Wall Street Journal get together and crunch officially released inflationary data to provide news readers an early bird peak at the following year's projected income tax brackets. This group, comprised of members from the Tax and Accounting arm of Thomson Reuters, tax analysts from CCH, and an accounting professor from Northern Illinois University - usually releases their annual tax bracket projections and estimations on tax deduction numbers for the following year during early fall (around September), well before the official IRS numbers are issued.

As marginal tax brackets track changes in inflation and other economic data fairly closely, the annual tax rate estimations by the Wall Street tax team members have yielded pretty reliable and on par results over the years. If you're antsy to get a head start on tax year 2010, stayed tuned in very early Fall 2009 for the newest updates on the 2010 projected federal income tax brackets.

Because of the election of Barack Obama as the new President of the United States and the handover of the country to a new political party, there are bound to be substantial changes in the tax code and income tax rates in the coming years. Working on an economic stimulus plan and advocating aggressive social agendas, President Obama has already proposed numerous changes to the ordinary income tax rates, such as raising the top rate from 35% to 39.6% - potentially boosting the tax burdens of higher income earners to new heights. He has also suggested the need to reduce tax deductions for American households earning more than $250,000 annually, and has also made proposals to increase taxes on capital gains and stock dividends. With a political and taxation platform that is decidedly against those those in the higher upper echelons of the U.S. tax code, those who have done well for themselves over the years seemingly have a lot to fear in Mr. Obama. Personally, while I feel Obama is doing a commendable job on the social and foreign policy front, I hope he doesn't get too carried away with his taxation ambitions. His remarks on taxes always make me nervous.

In the mean time, many of us regular taxpayers can only just ride along and hope for the best. Regardless of what Obama ultimately decides to do and no matter how federal income tax brackets eventually look like in 2010 and 2011, we should try to wisely structure our actions today to reduce our future tax burdens as much as possible, regardless of what happens. Such smart tax moves would include taking advantage of employer sponsored pre-tax perks like flexible spending accounts (FSA), and investing���� in tax deferred retirement vehicles like 401(k)'s and Roth IRA accounts.

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138 Responses to “Tax Brackets 2009 | Federal Tax Brackets 2009 | Money Blue Book” 

  1. l says:

    Jen, I can vouch for what you said. Same happened to us

  2. Jim says:

    Just saw where in 2007 the 400 richest Americans made a million dollars about every 26 hours. If you check the Tax Schedule, a layman would probably think "Ahh a graduated income tax system, they'll pay 35%!" Nope… They paid an average of 16.6%… Now, some of you may think this is fair. I remember B.R., you know, Before Reagan, when the tax rate on the richest Americans was +/- 74% but they only paid about half that too… So, it was dropped to help them out. Now the rate is 35% and they are paying half of this one… At some point, America should realize how the average guy on the street is not being served by our govt. But, the rich are being served really well and, based on their retirement and perks, the congress doesn't do a bad job serving themselves either.

  3. Rick B says:

    Andrew...you've shown yourself to be rude, arrogant, and supremely immature. Your last post speaks quite clearly to that assessment. Do you propose to go through life behaving childishly whenever someone disagrees with you? Are you going to jump up and down and stomp your feet when you hear a dissenting opinion? There are always numerous ways things can be viewed and problems solved. I learned that quickly managing 65 employees in my former position.

    I disagree with your assessment/solutions to our economic problems. For me to further elucidate my position on these issues would be a waste of time as there is no room in your consciousness for rational discussion. Your modus operandi is to bully, incite,and name call. NOTHING in your posts has any more validity than anything I wrote. They were YOUR opinions shaded with YOUR emotions whether you realize it or not. Opinions are just that, OPINIONS, whether they are yours or someone else's that you have latched onto. Even the brightest economic minds have opinions lined up against those opinions. No one is the repository of incontrovertible truth. I sure hope you learn that in life.

    For your information, I know quite a bit about business and finance. I built a successful business over a period of 10 years and sold it for a very nice profit before retiring. I did that while working a full-time job for another employer. I really don't need a lecture on finance and business from some young know-it-all who lacks respectful communication skills.

    This will be my last post to you as the board does not need to be burdened with this dialogue any further.

  4. Rick B says:

    Jim,
    You are very correct. The tax tables do not tell the whole story. The rich can avail themselves of many outs. The same applies for American businesses. I always hear about the supposed high tax rate on American companies but when you dig deeper, you find that very few ever pay taxes at a high rate. The tax code allows for them to find ways to avoid paying taxes. Again, this is supposed to be good in that benefits will eventually trickle down to the average guy. Not much trickling over the past couple of decades as the working and middle classes have slowly been squeezed. More squeezing is on the way in the not too distant future as the crap is about to hit the fan. We cannot keep running up the deficit and support all of the programs we now have. There will need to be more scrutiny of, and compromise in, programs and more revenue coming into the treasury for American to get back on its feet. It will be painful and take a long time. Right now the monied interests still have a strong grip on the levers of power but eventually that will give way to the masses who will become more vocal about the future of the country.

  5. Tax revolt says:

    FLAT TAX....................dam people when u going to learn.........................

  6. Rick B says:

    Here's a prime example of why the rich and other special interests will never allow a flat tax without loopholes to fly:

    Divorce Filing Reveals How the Rich Stay RichUpdated: 2 hours 23 minutes ago
    Print Text Size E-mail MoreScott Martelle

    AOL News LOS ANGELES (Feb. 24) -- As F. Scott Fitzgerald once wrote, "The rich are different from you and me" -- and apparently never more so than at tax time.

    Legal papers filed in connection with the high-profile divorce here of Jamie and Frank McCourt, whose portfolio includes the Los Angeles Dodgers baseball team, show that the couple took in $108 million from 2004 to 2009 and didn't pay a penny in income tax, according a Los Angeles Times report.

    Vince Bucci, Getty Images
    Frank and Jamie McCourt, here in 2008, are locked in a high-profile divorce battle.
    The McCourts made their money in real estate, primarily in Boston, before buying the team in 2004. So rancorous is the divorce that even the team's ownership is in contention. Frank McCourt claims he owns the team individually; Jamie McCourt claims she owns half.

    The McCourts apparently used legal tax mechanisms, including depreciating property, to offset the income. But that isn't likely to make the news any more palatable for people affected by high unemployment, record home foreclosures and tanked retirement accounts.

    Or, for that matter, for Dodgers fans. The team announced this week it is raising ticket prices for the coming season.
    Filed under: Nation, Money, Sports

  7. Nick says:

    Hi All,

    I require a Late Filing Interest and Penalty rate table for all the States for tax year 2010 to make it simpler for me to calculate it. Can anyone get it for me. I have tried the Tax Almanac website but they give out only Underpayment rates.

    Thanks,

    Nick

  8. lew says:

    Rick,

    My limited understanding of the BScouts was that they swore to the Christian God. Whether that's true isn't really all that important. I actually disagree with you and Andrew on taxing religious orgs no matter their affiliation. The Framers never intended for them to be taxed and weren't even considered to be done so.

    http://www.firstamendmentcenter.org/rel_liberty/establishment/topic.aspx?topic=tax_exemptions

    I will agree with you Andrew on who wastes the most money and is most corrupt though. If you took care of that and we had an actual heaven forbid, Constitutional government, we wouldn't have this conversation.

  9. lew says:

    They might not be, but they do swear to God. God stating an oath with God as part of it, IS 'religious'.

    Govt. is corrupt almost 100%.

    Nor did I didn't say no govt. I said a CONSTITUTIONAL government. We could fix the vast majority of issues we have right now if we did so. Just remember, the poor will ALWAYS be with you. Doesn't abdicate responsibility of helping out... just a statement of fact that will never change.

    American's, at least have the power of the vote? Um... I find that somewhat funny considering most didn't vote for socialized medicine, the patriot act, and so many other things we could list. It's foisted upon them. The problem is that most are receiving a benefit of some type from the public trough and are easily bought off.

  10. lew says:

    Forgive me for the limited English in my last post!

  11. Rick B says:

    Taxes suck...if your son's income is truly the same as last year, his taxes should be about the same. Therefore, there has to be an issue with the withholding amount or loss of some deduction. More of your son's income was subject to the 10% bracket in 2009 compared to 2008 rather than the 15% bracket. What you need to compare is the total tax owed for the two years. They should be about the same. Don't look at what is owed at tax time. He may have to adjust his witholding.

  12. Rick B says:

    lew...this country will always have some degree of socialism. I guess you're all for eliminating police and fire protection, too? That's a form of socialism. We all pay taxes so that if one of us needs those services, they are there. So are taxes for roads and bridges. So is insurance. So is SS. So is Medicare. Are you for eliminating all of those things and making a go of it totally on your own? I take it you're all for going back to riding a horse around town since there won't be any paved roads to ride on. Some people just seem to go overboard with this whole socialism thing as a means to vent. Just my opinion.

    My mom and dad had huge Medicare bills over the last few years and they paid nothing because they have a supplemental policy that pays whatever Medicare doesn't pay. Without it, they'd be broke. Where would your mom be without her socialistic Mediciare?

    Unfortunately, we Americans are very spoiled. We've lived a life of milk and honey for decades and now that the rest of the world is wanting what we have, it's getting more difficult for us to stay ahead of the pack. Looks like we've decided to fight each other instead of banding together and doing what's right and productive.

    I agree that many politicians are corrupt. However, there are some that really want to do good. Problem is, you can't always stay in office with good intentions. Our country is in for some very tough times ahead. I sure hope we get through it.

  13. Andrew K says:

    Phil,

    Looking at your earlier statement, I think you may be confusing marginal tax rates with effective tax rates. The effective tax rate is the AVERAGE tax rate paid. For example, if your tax liability is $20K on $100K, your effective tax rate is 20% (like your example above). The marginal tax rate is the tax ON THE NEXT DOLLAR of income earned. To continue with the example before, at $100K, your next $1 of income will be taxed $.28 (we will exclude deductions and credits to simply the illustration), but your effective tax rate will be lower. In a progressive income tax rate system, your effective tax rate grows steadily over time but will never be as high as your marginal tax rate after leaving the lowest tax bracket. In essence, effective (or weighted average) tax rate increases in a steady fashion with income where marginal tax rates (taxes on the next dollar of income) "step up" suddenly at certain trigger points (i.e. from 20% to 25% for single filers at $82,250).

  14. phil pauley says:

    Andrew K,

    Thanks for your comments...I think in essence we agree! In reviewing my comments (154) I should have said in(1) "There are no steps in the EFFECTIVE tax rates as you go from one tax bracket to the next", which is my main point, but is often misunderstood. You are quite correct in pointing out that there are steps in the marginal tax rates but there are, of course, no steps in the effective tax rates. You are also correct to point out that the "next dollars" are taxed at their marginal bracket rates but the resulting effective rates are always lower (except in the first tax bracket). My only disagreement is your calling the effective tax rate the AVERAGE tax rate... they are the ACTUAL tax rates, not the "average". I hope a few more people join in to help clarify these points instead of a lot of weird comments!!!

  15. Andrew K says:

    Lew, well said! I think this country is finally waking up to the realization that the left are hypocrites and taking away the rights guaranteed in the Constitution. Most should be in jail. Just tonight, I had two bar employees (or "bouncers") push me down a public street saying I couldn't stand there (in a public street). I was doing nothing illegal, but two police officers (who were obviously bribed) said I had to listen to them. This is society gone mad, left-winged government officials, weak-minded and oppressive, building a new country that I, admittingly, am ashamed to be a part of. Never, in my life, before Obama and Pelosi, have I said this: I am ashamed to be an American citizen! This country is in for what it voted for: handouts, disincentive, high taxation, bankruptcy, and the like. Bottom line: all of the rational, "greedy" young, hard-working professionals are not being heard. I'm leaving, this fight is not one that can be won through reason or objective correct economic policy. Good riddance to Rick and the rest of the left, I hope you enjoy what the USSR was!

  16. phil pauley says:

    Good riddance Andrew K !!! I am ashamed that you are one of my fellow citizens. Your views are nonsense/ I can understand why you get tossed out of bars! It might be a good idea for you to look at the Constitution ... Amendment XVI almost 100 years ago authorized Congress to collect Income Taxes, it isn't a nasty Socialist /Obama scheme! It was necessary back then because high tariffs were reduced and money was needed to pay for World War One. Unfortunately we still have a huge amount of military spending and must "provide for the general welfare"(see the Preamble); you know all those old and sick people,those schools and highways,etc,etc. You gotta be a Tea Party addict to not understand that the world has progressed a bit since 1776 !!!

  17. jack says:

    Well let me say we still have a unjust goverment and system regardless of the system at hand. i have to write a 6k check to the goverment from Bank of America sending me a 1099 for a debt we settled. I am lost on how I should be required to pay for their 25% intrest while fighting them over a mnissed payment the accepting a settelment amount. I have closed just about all my cards. They jacked my rates from 3-6% to 18-27% because we made some law changes. Now I am forced into bankrupcy due to the system. They had this note for many years and made a good profit at 8% so if they wrote the balance off why do I pay federal taxes on the amount? The system is flawed and the F-N half black eating good realy could not care. I ready to move out of this country where you are guilty untill proven inocent and your taxed on money you never recived. Constitution my ass , this is survival of the richest.

  18. John T. says:

    Look, it's very simple folks. The graduated income tax IS in and of itself socialistic. But, As long as times are good, "most" are content. But, when times get tough, and our free market economy goes through one of its inevitable slowdowns, (there ARE periods of boom and bust), you can count on the liberals come screaming once again with their class warfare crap, of how "bad" the "common man" has it and how good the "rich" have it, and how the "rich" "owes" it to society to pony up EVEN MORE because they obviously have it, and don't "need" it.
    Now here we are with the entire country broke and their coming for more money to the only ones left who have it: Those who have made it, but, more importantly, was responsible with it and SAVED AND INVESTED IT for their OWN better tomorrow.

    The problem with America is this: The people of this country have become spoiled, entitled, and simply lazy, and big government has helped to push them along each step of the way with its "help".

  19. m king says:

    There is a perception in the country that the wealthy may not be pulling their weight on taxes. Less well off people, at least some of them, look at their cars, homes, and the beautiful parks and public works that sit nest to their homes and they wonder. How do they do it?

    I chose to work in the public sector and have no complaints with the meager pension that allows me a small mobile home in a not great urban center in a high population area.

    I pay my taxes gratefully for what I get and have never felt spoiled. Early in my career I worked two jobs to make ends meet, though I could have chosen a more lucrative career that was wide open for me. Instead I chose public service. Thanks to a generous higher education program that was government funded, I completed a masters degree and an immeasurable boost in job availability.

    Few other countries allow such a choice. I have been in other countries, both in the service and as a visitor. People are not free to choose their career. Even in a free country like England, those not in the upper class are selected out of most better paying and fulfilling careers.

    America seems to have lost a competitive edge in the world (our stock market is next to last in world markets)and a turn away from higher education, especially in those areas such as science and math that other countries are excelling at. This waste in American talent will continue to see foreign markets dominated by those who see America in decline.

    This country is not broke. We still have mighty natural resources and the work of generations who worked hard and saved and built this country into a refuge for the world. If i am wrong, then why is everyone beating down the doors to get in? Surely they aren't all inclined to destroy and defeat us?

    The rich pour a lot of money into this country through philanthropy and by providing jobs through owned concerns that pay taxes. After years of loose spending there just is no other way to solve our problems but to make the hard choices. Reduction in spending in all areas by getting rid of waste and inefficiency and cuts to the bone.
    Loans for education are a priority for youngsters with the scores. Cut spending on colleges with a high freshman drop-out rate, including community colleges.

  20. Eddie Kirkland says:

    I BELIEVE THAT THERE SHOULD BE A LAW TAXING NON BUSINESS OWNERS WHO HAVE 5 TIMES OR MORE THE SINGLE PAYER AVERAGE U.S. INCOME TO PAY YEARLY THE HIGEST TAXES POSSIBLE.
    THERE SHOULD BE NO HIGH INCOME PEOPLE WHO HAVE A CITIIZENSHIP IN AMERICA AND DO NOT OWN A BUSINESS THAT DOES NOT PAY THE ABOVE TAX, BUT ALLOW ALL BUSINESS OWNERS WHO HAVE A U.S. CITIZENSHIP IN THE U.S.A. ANY INCOME THEY MAY MAKE AT THE LOWEST TAX RATE.
    EDDIE KIRKLAND , WACO, TEXAS

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