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. Marie says:

    My 17 year old lived with my retired parents this last year and was home schooled and then got her GED. Will they be able to claim her on their taxes?

  2. Kevin says:

    Phil,

    While I agree my math was wrong (must've been lack of sleep), the point of marginal taxation (higher rates) vs average taxation is not misleading in any way. I simply stated a hypothetical that gives no incentive to work beyond a certain point that is clearly driven by the marginal rate and has no relation to what your average tax rate might be at that income inflection point.

    Steve, I'm sorry that you owe more than you thought...that is going to happen to alot of people this year....what I find fascinating is this "great deal" the irs is giving for roth ira conversion allowing people to convert and pay 50% in 2011 and 50% in 2012, conveninently delaying taxation until the Bush tax cuts expire in 2011 thereby maximizing revenue. When government is concerned a "gift" is not always a gift.

  3. phil pauley says:

    Kevin,

    Your hypothetical example was misleading because you used a 100% marginal tax bracket
    which screws up the results (and is obviously unrealistic ).

    There is an incentive to increasing your income past the tax bracket change points since
    the effective tax does not jump up, it just continues on at a slightly higher rate of change!

    The IRS tax bracket system is clever but confusing way to provide a progressive [increasing]
    effective tax rate....

  4. Pepper says:

    Andrew, right on! The Community Reinvestment Act forced banks to provide loans to individuals with no proof of income and no down payments and, of course, in some cases, no principal payments . . . merely using appreciation as collateral for interest-only payments. When ARM loans re-set, people began losing their homes and the giant domino effect began. Similarly, dealers were making automobile loans for longer and longer periods of time, thus prostituting vehicles . . . sell now, don't worry about tomorrow's sales.
    My son just got a new job as a dealership GM after a year of searching for work and he was good. More than 100 qualified people are applying for every dealership GM job.
    I was laid off from the hospitality industry and fortunately can go on Social Security. But I'm now worried about how I'm going to pay my 15% tax since I've not been deducting anything.
    A sad state of affairs.

  5. Rick B says:

    Andrew,

    If you refuse to see how unregulated business can damage a society then I guess we have no where to go from that point. You, obviously, believe in completely free capitalism. The darwinian type I mentioned previously. That, of course, leaves absolutely no room for any "emotion" and is based on survival of the fitest in the most extreme form. If you look back to the Eisenhower years and move forward to today, you will see tax rates MUCH higher than now. You can't argue with that. You seem totally unable to see how greed got us into a big mess. Don't get me wrong, there is plenty of blame to go around. People who should not have been given mortgages got them. The average Joe got greedy, too. However, in my mind, those granting the mortgages should have had the final say as to whether someone could handle it or not. You try to pass the blame off on others who forced lending institutions to give loans to those who should not have received them. That's kind of a simple way out. Banks don't have to lend money to those they feel are not credit worthy despite any pressure there might be. It was the giant lending institutions that came up with the grand scheme to package loans and turn them into investment vehicles to dump them off because they knew they were shaky. By the way, I watch all news outlets, not just CNN. I find CNN about in the middle, MSNBC way to the left and FOX way to the right. Actually, I've not been watching too much TV of any kind because it's all BS right now. Everything is solid partisan politics to a degree that makes me want to puke. They're all hammering at peripheral issues while the important stuff gets pushed off to a future date. It's really sad what things have come to in American politics.

  6. sandra dorsey says:

    Just letting folks know, that if YOU are retired military and/or know someone that is retired military..better tell them that any tax breaks, credits, etc they got last year or so..uncle sam wants it back..WHICH is why all retired military checks have less take home pay coming in because the federal withholding tax was increased ..(in our case, by 16.50 a month). On hubbys W2.,..he always claims "0" (zero) dependants so they take the max out anyway..BUT..the way this new government has done this take back the break (s) theyve given the lil people of this country..just burns my backside..

    I wonder if the rich, wealthy and the politicians have paid their fair share before coming after us retired military/lil people of the country.

  7. Rick B says:

    Bill,

    Withholding amounts don't necessarily correlate to taxes owed at the end of the year. Withholding is based upon your income AND the number of dependents you claim. To determine your tax bill you need to know your income/deductions and compare the figure to the marginal tax brackets. Since taxes have not been increased for 2010, you're getting ahead of yourself.

  8. edward diolazo says:

    i dont mind paying taxes as long as its fair. eliminate the food stamp program and let them work. i'm tired of payng taxes just for this lazy people. i cannot even afford to fill up a shopping cart nowdays but this people are like spending like they are paying taxes, and guess what they will even load it in a cadillac or mercedes. i cannot even qualify for the basic services or the government just because i am working and i am paying taxes. is this fair ?

  9. Rick B says:

    Edward,

    I worked in Human Services for 30 years. I can tell you that the VAST VAST majority of people using Food Stamps need them very much. Many are older people living on fixed incomes or working mothers not making enough to feed their kids. Too many people label all Food Stamp recipients as unworthy leaches. That is just stereotyping people. For every welfare recipient driving a big fancy car, there will be thousands driving cars barely staying in one piece. There will always be a few scammers who get through the system making legitimately needy people pay the price of being labeled scammers, too. Don't speak from fact-lacking emotion, get the true information.

  10. Rick B says:

    Pete,

    Not a bad way to put it. As I've said previously, unregulated capitalism can turn into a monster because it basically becomes Darwinian. The biggest and strongest become a hulking mass of greed and chop up everyone else. Is this how we want our American society to evolve? Should all parameters of behavior in the business world be tossed out? Should we just have a free-for-all right up to the bitter end?

  11. Cristy says:

    I have a good job and work hard all year. I wouldn't mind paying my share of taxes except I know so many, like a relative of mine who is in his late 40s, who live off the taxes I pay while he is perfectly able to work a full time job. While he buffaloes his doctor and could win an Oscar with his acting, he has every day off to go do whatever he pleases with his disability check and the money his dumb as a box of rocks mother doles out to him. More follow-up should be done on people getting disability and welfare. We could probably make a big dent in this country's debt if these slackers got off their lazy behinds and got a job instead of sucking money off the government and their relatives!

  12. Andrew K says:

    Cristy,

    Great point you made above. A large portion of the deficit is attributable to programs that don't yield a thing for our society, such as welfare programs and unemployment benefits. If we must have these programs as "economic stabilizers", then make those people work for their money rather than simply pick up a check. There are plenty of roads that need cleaning, public facilities that need to be maintained, etc., and there's no need to hire an additional employee to perform these tasks when welfare-dependant individuals, who are perfectly capable of doing this, sit on their ass all day long and get paid to do it. Reagan tried to implement a program like this but was ridiculed for being too "cold" and "uncompassionate" for making these people work for their "compensation." It is truly a sad state of affairs when hard working individuals must subsidize those who truly are a burden to everyone else. Rick, I have to say, I agree with you, if our founding fathers could see this, they would be sick to their stomachs.

  13. Carrie says:

    Hello all,

    I am wondering if someone can help me with my question.Im 19 and I am always claimed as a dependent.In 2007 I made about $9,000 and 2009 I made just under $8000.But this year I am only getting back $57.00 and with the 2007 return I got over $400.Both years done the same exact way.Some one I know made around $3000 in 2009,was claimed as a dependent but got over 400 back still.Why am I getting next to nothing back this year?If any one has an idea why this could have happened or can point me in the right direction on how to find out that would be great.(I did not make enough to file in 2008 also)

    Thank you.

  14. Rick B says:

    Andrew,

    I'm sorry that you're such an angry unhappy person. What I said was that taxation should be progressive. The more you make, the greater the percentage of your income you should pay in taxes. That's my OPINION. In your ideal world should I not have an opinion? I also did not say that individual economic freedom is ruthless and uncaring. What I said is that capitalism without parameters (regulations and oversight) would become totally Darwinian. Are you for capitalism without any parameters? No oversight? No regulations? Just wondering how that would work in the real life. Would you like to go through the derivatives debacle again any time soon? I'm also all for tax cuts for people making under about $200,000/yr. Yes, the money they would spend would help things move in a positive direction. The rich don't need any more tax cuts. They got theirs under the Bush Administration. I was not in favor of the bailout for big banks or any big business. They should have been allowed to suffer their fate as determined by their risky business practices. But, high powered capitalists have friends in high places. How long do you think all the countries of the world can keep growing through consumption? How long do you think earth's resources are going to last? At the rate humans are consuming natures bounty, I would say things are going to be rather depleteted within a matter of several centuries unless humans wise up and start cooperating and planning. I'm guessing you're a youngster less than 35 yrs. old with a very selfish view of things. If you think revolution is not a possibility in America, you better wise up and read some world history. Also, your crack about some 6 yr. old understanding economics better than myself is delusional. I'm making no political statements on here. I am not registered with any party. I'm an Independent voter. I don't trust any politicians. They are tools of the monied influencial and are basically out to get re-elected to their cushy jobs. Our system of governance has become hopelessly corrupted. I don't have all the answers and don't claim to. I only have opinions which you may not agree with. Take a chill pill, dude.

  15. donna lafave says:

    if the tax bracket threshholds have risen then why is my january check reduced by an additional $10.00 of Federal withholding when i have had no pay increases???

  16. Catherine says:

    Carrie, above, asked a question and I have a similar one:
    I make less that $20,000 per year, yet this year my income tax is over $500 more than it was last year!

    How can this be?

    2008, my income was <$19,000 and my income tax was $1200.
    2009, my income was <$20,000 and my income tax is over $1700.
    I don't itemize deductions.
    Was there a tax increase for my income bracket?

  17. chuck says:

    Obama and Co. changed the rules on Fed tax deducted from our pay checks last year and the result for us was that we have to pay close to $700.00 in addition to what was withheld over 2009.
    They taxed our Social Security Income at a much higher percentage than in 2009 also, and I'm watching John Stossel riding on a new red electric golf cart that cost $8,000.00 that he got for FREE due to this "fair" tax code?
    $700.00 is more than two (2) car payments on our used 4 year old Chevrolet Impala that we had to buy last summer. We paid over $1000.00 just to get license plates for it.
    I feel like the only hen in a fenced area with 12 roosters that find any oriface on my body, and " please their pleasures" at my expense. Reason being is that the farmer that owns me can't find it in his heart to kill the roosters, or killed all the hens not knowing the difference, or maybe just a sadistical "progressive" that thinks as long as I lay eggs, what the hell. I'm just trying to avoid him as his wife isn't giving him any lately, and he has already tried to put a smile on the sheep!

  18. Rick B says:

    I don't know where you people get your tax information. The fact is, taxes have not been raised. Yes, they can fiddle with withholding amounts but at the end of the year it all comes out in the wash and you pay no more than you did the year before assuming your income has not increased too much whereby you'd be in a higher tax bracket. By the way, the amount of income subject to each tax bracket has been raised for 2010 so if your income has not gone up, your taxes won't go up, either, unless you've lost some big deductions. Too many of you confuse withholding with taxes owed. There's a big difference. If you're unhappy with your withholding amounts, tell your employer to change it. Any intelligent person with an uncomplicated tax situation ought to be able to figure out almost to the penny how much wiil be owed to Uncle Sam and match his withholding to that number. I do this every year and I have to send in estimated taxes. It's not rocket science. By the way, taxes on Social Security have not been raised either. It your income is above a certain level, you pay tax on 85% of it instead of the lower rate. That hasn't changed.

  19. Andrew K says:

    Rick,

    Once again, your arguments lack consistency. You are arguing for a progressive tax rate AND a less consumption-dependant economy. These two are inherently at odds. As one's income increases, his/her marginal propensity to consume decreases (or, alternatively, marginal propensity to save increases). This is common sense, if you are in a low income tax bracket, you simply cannot afford to save as all income is spend on necessity items. The reverse is true for those in higher income tax brackets, as these individuals can afford to invest their surplus income. Thus, if what you want is a more investment-dependant economy (fueled by savings) the logical tax incentive would come through a regressive tax system. You tax those in lower brackets more, so consumption decreases, and as those who make more money are taxed less, the gross amount invested in savings rises, fueling investment and lowering consumption's proportional share of GDP. I'm not advocating for this (I am an advocate of a flat tax), but if you are hinting that consumption is not the way to grow, than this is exactly what would be suggested from a tax standpoint. So, buddy, which is it, are you an advocate of a progressive tax system or a less consumption-dependant economy, because you can't have it both ways? Also, your assertion that you aren't making political statements is blatantly false. In one of your recent posts you state, "I, too, am getting weary of everyone calling President Obama a socialist for wanting business to be accountable to some regulation." Sounds pretty political to me. Also, when you state that the earth's resources will be used up in a "matter of several centuries," are you basing that on any sound scientific research, or just pulling it out of you're a**? I guess you don't believe in technological advancement or innovation either, although real GDP per capita has increased rapidly over the last 50 years (driven by innovation)? As for William Klein, some very prominent economists argue that TARP didn't help much of anything, and all of the recipients have not paid back the amount of funds. When you examine TARP funds received as a proportion of a firm's total assets, none of the amounts received by the individual firms, obviously, would have made the difference between solvency and insolvency. Just for your information, since you seem to be somewhat financially illiterate, total assets can be found on the balance sheet, along with a firm's equity (or alternatively, degree of solvency). You only head about the most financially stable firms, such as Goldman and JP Morgan, which have paid back the funds. Hundreds of billions have not been (and won't be) paid back. Also, I do read the economist, but evidently you don't judging from your incoherent rant. Face it BUSTER, Keynesian economics doesn't work! I would tell you to check into your facts, but judging from your outdated views, it appears the only thing you should be checking into is a retirement communi

  20. Rick B says:

    Steve (The Original),

    Good point. That's another example of why using a tax program like TurboTax is a good thing. It automatically takes your data and searches for anything you might be eligible for.

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