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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. Carrie says:

    I'm a bit worried about our taxes this year. I know that they changed the way they deduct federal income tax from paychecks. Due to the frequency of my paychecks from one job, and the smaller amounts my second job, and the low amounts my husband makes from his two jobs, we rarely see Federal income tax deductions on our paychecks.

    My worry is that this is going to come back and bit us when we file our 2009 taxes in April of 2010. Are the federal tax rates going to be adjusted to reflect the change in paycheck deductions, or is all that money the government let us keep from our paychecks going to need to be paid back?

    I'd like to get some concrete answers now, so that we can plan for tax day, and possibly change our exemptions for our paychecks so the Fed gets their cut before tax day and we don't have a huge tax bill! I'm not concerned about getting a refund, but I don't want to have to pay either!

  2. john says:

    that was bush adminstration that gave money for the bailout you dummy.

  3. your face says:

    Hey why dont you chill out and leave her alone.

  4. john says:

    Steve, you are shortsighted and dangerous! Especially the part about taxes at the top aren't nearly as high as they once were. Well, income tax itself used to be zero in this country if you want to go back far enough. Look it up with one of your fancy search engines. Start with something like: when did the income tax start in the USA. You might get something back like: In 1862, in order to support the Civil War effort, Congress enacted the nation's first income tax law. Most people paid about 3%. Funny how you choose points in histroy that support your viewpoint and ignore hundreds of years of history where the tax rates were MUCH lower or even zero. Short-sighted and dangerous indeed.

  5. Steve says:

    John, quite apparently you read one line from one of my posts and chose to label me based on that single line. I don't play that sort of game.

    In my opinion, it's people like you who are "dangerous" because you have no interest in discussing anything to any degree of detail. You seize on a bullet point and proceed to use the anonymity of the internet to label and call names.

    The fact is that tax rates at the top HAVE been much higher than they are now. That is a fact. That has nothing to do with the fact that at one time income taxes didn't even exist. It's a non sequitur.

    I know the history of income taxes. I don't need your pious history lesson.

  6. bill says:

    Steve, you have way to much time on your hands. GET A LIFE!!!!

  7. Steve says:

    Actually, you have no idea how little time I really have. I run a company of 54 professionals and average around 55 hours per week in the office, Monday through Friday only of course.

    The weekends are for "life"! :^)

  8. Dale has this says:

    I am completely broke and love life 24/7 and pay taxes with the wife. None of us has health insurance. We can barely make mortgage and pay bills. The one thing we do have is a little tiny biz that just gets us by. I am thrilled that we are allowed to work harder rather than be expendable. What a great country! Remember the country is the people. Shut out media and follow your instinct. You will all be fine. As f'ed as things are each us us can still face fear in our own way.

    By the by we have no family to fall back on. No place to go. There is just US. Get it. Stop trying to beat the system be one! Life owes you nothing beyond what you make of it.

  9. Dale has this says:

    Darn I made a typo. "each us us" should read "each of us"

  10. Stef says:

    Speaking of tax increases....

    I've been researching whether it will be beneficial to cash out 401K and pay of my mortgage now.... and thought I'd share what I found....

    It shocked me. I don't think our generation knows how good we have it as far as taxes go. Some say history is a cycle. If that is true, we are in for a rude awakening when the cycle turns again. (SEE BELOW)

    With the deficit and economy the way it is now....high taxation is inevitable for everyone.

    I chose Married Filing Jointly and the $100, 000 - $150,000 tax bracket. That tax bracket range did fluctuate over the years, but this gives a general idea.

    HISTORY OF FEDERAL INCOME TAX RATES

    1927-1931 25%
    1932-1935 56%
    1936-1940 62%
    1941 69%
    1942-1943 85%
    1944-1945 92%
    1946-1953 90%
    1954 89%
    1955-1963 81%
    1964 71%
    1965-1978 66%
    1979-1981 64%
    1982-1986 50%
    1987 39%
    1988-1990 28%
    1991-1992 31%
    1993-1996 36%
    1997-2000 31%
    2001-2002 30%
    2003-2009 28%

    *The above is 82 years of US Income Tax History

    *For 52 of those years, the tax rate was OVER 50%...and that is NOT the highest tax bracket

    *For 21 of those years, the tax rate was OVER 81%...and that is NOT the highest tax bracket

    *For 13 of those years, the tax rate was 28%, which is what it is today and has been since 401ks' started in the 1980's.

    If history goes in cycles, as most agree that they do, our 401K/IRA's may have future tax consequences beyond our wildest imagination. No wonder the government totes them so much.

    10% penalty? Might be worth thinking about and having control over your future. We've already lost enough in the market and there is no guarantee for the future. However, I can bet that future taxes have a huge possibility of suffocating ANY future returns.

    Here is the PDF to confirm the information

    http://www.taxfoundation.org/files/federalindividualratehistory-200901021.pdf

  11. K says:

    Stef,

    While I agree with conclusion, it is based on misleading info. Clearly, income not indexed to inflation. If you made 150k in the 40's, you'd have the purchasing power of a multimillionaire today. Erock says it best, tax discussion is meaningless because of irresponsible spending. Tax rates will increase to service the higher debt costs once the credit quality of the US is seen for what is really is. It is laughable that some of these posters are taking the healthcare debate projections as fact....and the Iraq war was supposed to cost less than 100B not to mention the greatest ponzi schemes in history Social Security and Medicare are supposed to be self funding...Its like Bernie Madoff "investing" your dollars in a nice steak dinner. Ask yourself why there is no discussion about the econ 101 tenant of supply of "medicine" in this "false" debate? Any effort at price fixing of medical costs will destroy industry and reduce quality. Instead, break the monopoly of AMA and allow medical industry to grow according to the free market. Government has already price fixed and wounded the long term healthcare industry. Honestly, a better investment for the government to bend the "cost curve" would be to throw all that money into subsidizing tuition for prospective medical professionals, but that's a whole other discussion about government distortion of any market..i.e. mortgages.

  12. Jerry says:

    Ron (Paul) from July 28th, 2009 at 9:02 pm is exactly right regarding Tax and the Federal Reserve. What a farse! Bail out corporations to the tune of trillions?? Granting bankruptcies like it's giving out candy?? It took billions of dollars to fuel those air-craft carriers, tanks, jets, hummers, feed those troops all in Iraq. You can't just loosen money for a war only, that's impossible; you have to lossen it for everyone. So we got our ultra-expensive war and $300k+ home loans to people making $30K year!! Say what?? The Federal Reserve flooded the World Economy with it's own printing press paper money and has clearly de-valued the U.S. dollar possibly beyond recovery. Gladly pay taxes to a bunch crooks and thieves hiding behind un-audited, no accountability doors. Do you people realize there was no central bank (federal reserve) in the U.S. prior to lets say 1905. The richest, wealthest men of the time created the idea of the central bank and convinced newly elected President to allow it. By the way check out "Audit the Federal Reserve" legislation H.R. 1207 and Ron Paul's website at http://www.ronpaul.com/

  13. Yes We Can says:

    Hey Jerry,

    The election is over. Ron Paul and McCain never had a chance. Time to stop looking into the past and start looking to the future. President Barack Obama is our head of state now and it's time we throw our support behind the guy who has what it takes to fix our broken system and get the corruption out of Washington DC for good. Strict regulation of the financial system and more jobs for the people is what we need. We also desperately need universal health care for all as health care is a human right!

  14. Jerry says:

    This isn't about elections. In fact I didn't even realize Ron Paul ran for vice-president during the election. I just found out about him recently. Whether or not Obama is willing to help end the Federal Reserve I don't know, but this isn't about politics, it's about ending a private organization's (federal reserve) control over monetary policy in OUR country. Why should it be allowed that the central bank go un-audited? "Strict regulation of the financial system" is exactly what H.R. 1207 is. Obama suggests law, but relies on both the upper and lower house to make law reality. So lets see for the record if Obama will get behind "Strict regulation of the financial system", because now he has the opportunity to do so. I definitely don't see printing more cash as a viable solution and so far to my best recollection this is what we have seen from Obama.

  15. Steve says:

    Give it time. The world financial system was literally on the brink of collapse only a year ago. That is a fact, it's not something I'm making up or even exaggerating. We were very, very close to a run on the banking system unlike anything seen since the Great Depression. And this time it could have been much worse. Money markets were collapsing like fish on hot rocks. Were the actions taken perfect in their timing or measure? Certainly not. No human endeavor is ever perfect. But here we sit, one year from the near total collapse, and most people think the financial system has stabilized to the point where fears of outright collapse are firmly in the rear view mirror. There are excesses yet to wring out, primarily in the commercial real estate arena, but that deleveraging has begun. Obama has said he will make reducing the deficit over the long haul a top priority of his administration. We will see if he can make that happen. In the meantime, let's not forget his administration inherited an annual deficit of over $1-trillion for the previous fiscal year. This will be a long-term issue, and no one should expect miracles.

  16. Andy says:

    2010 Tax brackets are now out and it was interesting to see what a turn around one year makes - thanks to 0 inflation. hardly any changes to the tax brackets, which means higher taxes in relative terms for everyone next year.

  17. Larry D. says:

    If I hear one more person try to tell me that the country will implode if the taxes of the wealthiest people in the country raise, I will throwup....the highest tax rate used to be around 60% or more that was used to penalize those people who took advantage of the system to gouge and horde large sums of money...the wealthiest state that people have no entitlements...but, state that they are entitled to all the money they can horde and should not be taxed...because for some reason they create jobs...well, let me make this clear, corporate executives do not use their personal incomes, bonuses, and perks to pay for employee salaries...and you should also know that with the cuts in employees, they do increase their salaries...the idea that the cuts are to make the corporate more profitable is BS....just look at the investment bankers....

  18. Carol says:

    I have had the opportunity to live in England until a few years ago where our VAT ( value added tax ) was 17.5% on everything we bought on the sticker , not once we got to the cashier. The health care was free but you did have to wait to be seen unless it was an emergency. Business owners / self employed were the ONLY people who had to file taxes annually. Savings on paper, etc HUGE - your employer had your taxes removed at EACH paycheck automatically. I understand that by overpaying each week / month allows the government here to use your money ( interest free ) until you fill in the proper paperwork on your annual tax returns to ask for it back.... BUT beware; fill in the wrong one, forget to check the right box...... HUGE fines etc etc will follow....
    Now to my question; I was until recently a single parent working a full time job and then a couple of other jobs to make sure I met my financial commitments - I have NEVER received any child support so REALLY had a lot to make up. I am constantly hearing how companies who mismanaged their businesses have received millions in "bail-out" including banks. I also have heard that several homebuyers who bought mortgages beyond their financial ability to pay long term when the 'starter' repayments wore off are being helped out. First time home buyers are being offered monies to buy homes - to encourage once again those who probably shouldn't be otherwise buying one....? I simply don't get it? Shouldn't those who CAN be helped too? Did I take those additional jobs because I wanted to work until I dropped or to meet MY obligations, to MY children and to pay MY country taxes?
    Looking back if I had only sat back and run into thousands of dollars of debt I could be receiving money for nothing too...... It really upsets me when I see those TV ads saying " Do you owe the IRS thousands of dollars?" This is then followed by people claiming they owed $200,000 but only had to pay $ X.. how is THAT fair ? I owe whatever I have to pay that amount - no discount , not breaks.....
    Is America really out to reward the bad business owners and people who cannot manage their money? In a normal world they would be fired, made bankrupt etc please help me explain this upside-down system to my children who are constantly telling me to give up teaching elementary school to run a McDonalds where I would make so much more money without the stress teaching today has.
    Thank you in advance for any help / clarification.
    Carol

  19. ShutUp says:

    If you are making $372,950 a year you are not struggling. End of story.

  20. Eyeless1 says:

    Ah, but what if you're making $372,949 a year? Don't us poor slobs deserve a bailout?

    I kid, of course.

    I get a little annoyed at those people who go on about how they don't care who's in office, so long as they can keep their "hard-earned money", then proceed to whine about "bail out" this and "deficit" that. If you don't pay attention to who's in office, if you don't take the time to inform yourself about the facts--FACTS, not some politician's opinions stated AS facts, mind--if you don't do your job as an American citizen and participate in this government as an informed citizen and voter; then you have no right to complain when things don't go your way.

    That lack of basic citizenship skills, so prevalent in the Baby Boomers and their Age of Me First, is the root cause of our troubles today.
    -It's why we dismantled, law by law, the network of regulations which kept banks in check.
    - It's why we've lowered taxes over the last thirty years so far that we can't even keep up interest payments on the loans, much less pay down our debt like honest people, and have to lie on our government's balance sheet like a corporation circling the drain.
    - It's why we've closed our eyes to the fact that we have the worst health care this side of a third-world country, and console ourselves by saying that, at least if we pay through the nose, we can at least still find a few doctors who will work in this country, so long as each doctor has two lawyers to defend him from lawsuits and four secretaries to help him wade through the labyrinth of our "insurance provider network".
    - It's why our nation's children were raised on television and "participation awards" rather than achievement, and why so many of us are becoming disillusioned because we have grown up into a world where we will be forced, for the rest of our lives, to spend our hard-earned money paying down our parents' excesses.

    But that's all behind us now. The Boomers are retiring, and though they'll no doubt still be watching Fox News, and blithely voting their children into debt slavery in order to lower their taxes and keep up their Medicare benefits (you kids can pay for your OWN healthcare, though!), hopefully they'll soon be too senile to make it to the real voting booth, and will instead content themselves by agreeing loudly with Rush Limbaugh that government should stay our of everyone's lives, except to ensure that nobody ever aborts a child, or burns a flag, or utters a swear word on TV, 'cause that's just un-American.

    Those who read this far probably think I'm a Democrat. Well, I'm not. I'm not a Republican either, nor a Libertarian, nor Socialist/Communist, nor any of those other parties on the ballot (though I gotta admit the Pirate Party's got a great name). I'm an American. I believe in the power of the individual to shape his fate, through hard work and perseverance. I believe that government is nothing more or less than every individual in this country investing what they choose toward the good of the community, and because of this everyone who talks about how government is ruining this country really has noone but themselves to blame for not putting in the work to change it.

    If you choose not to participate, then you have no right to complain when someone else makes your choice for you. Get out there and participate in the national debate! Vote! Convince your friends to vote! Find representatives who will work to get things done, like Barak Obama and Olympia Snowe, rather than mindless drones who say "No" to everything just to score political points while the house burns down on their heads!

    And then, if you've done everything you can and we fail anyways? Yeah, then you can complain.

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