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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. Mr Robot says:

    Well at least Obama realizes that dire situations require dire methods, even if it requires turning his back on his old campaign promises. I'm sure his obsessive supporters won't care either way since Messiah-Obama can do no wrong, but it looks like ole Obama won't be repealing the Bush tax cuts anytime soon despite his former promises that he would do so. After all, promises aren't important after you've actually won the Presidency right?

    As people may know, the Bush tax cuts had heavily favored the rich. In what is pretty much an acknowledgment of the serious situation and realities, Obama is leaning towards letting the Bush tax cut for the wealthy expire on schedule in 2011 rather than repealing it sooner, which in essence is effectively delaying any tax increase for the rich while he gives his stimulus plan a chance to work. Great move for the Republicans...but disappointing for Dems who wanted marginal tax rate efforts to be shifted more to the rich sooner than later.

  2. Michael says:

    President Obama's new tax brackets as proposed (according to the Wall Stree Journal) would create a new 36% rate and would apply to an adjusted gross income of $250,000 less the standard deduction and two personal exemptions. And yet, with all of the supposed hissy fit fuss about the catastrophically future high tax rates, the highest marginal tax bracket rate under the newly proposed Obama plan would only be 39.6%.

    That's not too bad. Besides, rich people deserve to pay their share. It's time those who can afford it get fleeced for a change instead of us regular Joes and Janes getting hammered.

  3. Squamish says:

    In case some of you have been asking when the Obama income tax changes for higher income taxpayers will take place, they are slated to not take effect until 2011 - still quite a long ways off! So relax

    The Pres has proposed raising the top two IRS tax brackets. The current 35% top marginal rate on ordinary income would rise to 39.6%, and the 33% rate would increase to 36%.

    Obama has also proposed new limits on itemized deductions, and suggested that the top rate on long term capital gains and most dividends would rise to 20% from 15%. These plans are designed to affect upper income Americans only, described as families making more than $250,000. So ordinary people should be all right. Stay cool people

  4. Tim says:

    "..boosting the tax burdens of higher income earners to new heights."

    That's malarkey. What Obama proposes is still a lower tax rate for the highest earners than 75% of the Progressive Tax Systems century of historical usage.
    39% is also what Ronald Reagan averaged during his tenure. (He did inherit high and drop lower, but then put us deep in debt...like George did.)

    Your not so veiled attempt to portray Obama as a socialist is even more criminal when you add the fact that you know these things as well as anyone.

    A progressive tax system helps the middle class, who are the true engines of the economy. Otherwise you get Mexico.

  5. LaVern Isely says:

    I believe President Obama is CORRECT when he said that the income tax should be raised on anyone making over $250,000. It also should consist of two brackets and anyone making over $1,000,000 should be in the second bracket and it should be starting with the 2009 tax year and not 2010. Otherwise, the middle class will LOSE CONFIDENCE in President Obama. All I hear, up to now, is the sacrifices that the middle class are going to have to make. The people that one reads about in the Forbes 400 magazine are all billionaires and I read in BUSINESS WEEK that at UBS Bank in Switzerland, there are 52,000 accounts from Americans. It seems to me that Neil Barofsky does his job, he's going to find out the problem is a lot worse than he ever dreamed of. They're no reason why the TARP bailout should cost the taxpayers $3 trillion. The government seems to be dragging this out and the longer it goes on, the worse President Obama will look.
    Yours truly, Disgusted Middleclass Taxpayer, Public Citizen and AARP Member, LaVern Isely

  6. Karl says:

    Complain about paying taxes all you want, but always keep this in mind: the only thing worse than paying taxes is not having any income on which to pay taxes.

    Keep that in mind next time you have to file yours. Having to pay tax on your income is one of those "problems" that many people (especially lately) would gladly trade you for theirs.

  7. Jenny says:

    Karl, I will glady pay taxes to provide for those who CAN'T work and for the Vets and the Seniors. BUT I am sick of paying for all the lazy a$$'s who won't work and all they know how to do is lay on their backs and reproduce.

  8. Daryl Powell says:

    Can you advise the status of Obama's campaign promise of no income tax for seniors earning less than $50,000?

  9. Paul Jaquay says:

    I also support the concept of taxes. I have lived in numerous other counties and have seen what happens in socities without a tax base. Not for me. I am now sarting to believe that our taxes have not kept up with the explosion of incomes we have seen over the past 10 years. I no longer see America as a wealthy nation. I see America as a nation of some very wealthy people. Just look at our cities our roads etc. We as a nation are broke. I read last spring that if congress did not fix the ATM an additional 7 million tax returns would be have been caught by this tax. Thats 7 million more in just one year making 250k plus
    Again a broke nation of wealthy people.

  10. Tucker says:

    Do I enjoy paying my heating bill? NO
    Do I enjoy paying my water bill? NO
    Do I enjoy paying my internet bill? NO
    Do I enjoy paying my phone bill? NO
    Do I enjoy paying my grocery bill? NO
    Do I enjoy paying my monthly mortage bill? NO
    Do I enjoy paying my car finance bill? NO

    Of course I don't like to pay these bills . . . but I do, without fail.

    If I chose not to pay them, they'll shut off my gas, turn off the water, internet and phone service, take my house and car away and I'd go hungry.
    I pay them because I'm responsible for them and I want to continue to live a decent lifestyle in this country.

    I am a proud citizen of the great country.
    It's MY country and I truly believe I'm responsible for it.
    Do I enjoy paying my TAXES? NO, but that's how I help pay this countrys' bills.

    Cheers to all of you who had something to compare to by experiencing living in a foreign country.

  11. Hal says:

    I would consider myself conservative, and I would agree with the above about paying taxes.... we have an infrastructure and way of life that we want to preserve, protect, and keep clean.... and it costs money. The only problem I have with the tax system is that half the country pays for the other half.... Even people making $30,000 should pay something...even if it's only $100 (0.33% of their income).

  12. Tom says:

    I stumbled across this conversation, definitely interesting. I think it represents a relatively quiet majority of Americans...not D's or R's. I agree that paying taxes is part of our duty. Where I begin to be challenged is the definition of "fair share" and the relative inefficiency of government. Let me explain;

    I often hear folks talking about taxing people making over $250k as fine. The rich need to pay their fair share. How much is fair? Today, the top 5% in terms of income pay something like 80% of the taxes. When is it too much? Is it too much at 39% of your income? 50%? When does it no longer pay to work hard and earn as much as possible? That is a challenging question.

    The other issue I have is around Government efficiency. Would you give to a charity where 50% of what you gave went to the charity's overhead? Well, that is about what goes on when you "give" to the Government. There are some areas of necessity, like the military and roads, but other than that, there is not much the Government does well.

    I guess I am not sure I see many examples of where the Federal Government actually does something well. Our politicians don't even read the bills and only worry about how it impacts their next election. If I had my way, we would vote every incumbant out of office. We need to break free from the old guard power brokers.

  13. pablo says:

    What about the millions of people collecting unemployment that are going to be screwed because of insufficient withholding practices, not being able to have more than 10% withheld?

    Since it's taxed just like income, you are going to have a LOT of broke people owing a LOT of money next April - because the money just is not enough to pay taxes on top of other important financial obligations.

  14. Josh says:

    Do you guys realize that when you raise taxes on the top earners that all they are going to do is hold onto their money even more or send them over seas? They will then stop investing in jobs because they cant afford to do it and maintain a profit. Most of these top wage earners are YOUR BOSSES! Think about it. They pay YOU. If they are taxed more, then you will earn less because they want to collect a profit as well. Think about it as if you are in their shoes. I have no problem with paying my fair share in taxes as long as my money isn't going to crap. People who live in public housing, have expensive cars sitting in front of their house, living off of our hard earned money, then sticking their hand out for more after they have 6 more kids. Then a majority of THOSE kids see that they can sit on their ass and do nothing for money, it is just given to them. Bush spent us into oblivion during his terms and then Obama is going to triple that. None of the stimulus money is going to work, the cap and trade is going to cause this country even more heart ache, then the proposed universal healthcare will then bankrupt us. C'mon people, wake up! These people in our government, both Rs and Ds, are screwing this country up every day. We dont need anymore spending. They have already spent money WE DONT HAVE!!

  15. Ron says:

    Let me first of all clarify some semantics when one refers to "taxes" before I get into whether or not taxes are necessary. Taxes on gasoline pay for infrastructure like roads & bridges. Medi-Medi taxes pay government insurance companies & those under which, need care that they provide. Income tax is the majority of what we pay out of our pockets every year. Income tax is not paid to the treasury: it goes straight to the Federal Reserve. This would all be good if the Fed was transparent & there was as much apportionment as we are required under penalty of force (not statutes or regulations) to denote when handing over a percentage of our hard earned dollars each year.

    The Fed has never been audited, it's books are closed. No citizen can see where the income tax goes. The truth is that it goes directly to the Federal Reserve to pay off interest that we owe on bonds we effectively sell to the Fed to get the several billions in bailouts. The treasury will print these bonds (if not done electronically) & the Fed will buy them by printing (or adding ones & zeroes to their server) dollars to be put into the pool of circulating currency.

    It is no surprise that when there is more of something then each component is worth less individually. If the Federal Reserve prints money out of thin air & adds to circulation, the dollar is debased & inflation occurs. The cost of living goes up as inflation sets in, but the last component of the economy to catch up to the new inflated standard is the wages.

    It is against the Constitution to allow any other entity to coin currency other than the congress. The Federal Reserve is a private central bank that is not held by any accountability or oversight by any government entity. It is the Fed that sets the interest rate & creates inflation. It is also never defined in any clear way in the tax code or supporting regulations & statutes (laws & means to enforce them) that "taxable income" is domestic income earned by a US citizen. It is essentially voluntary, but may be punishable by imprisonment, fines & property seizure. There is NO law.

    I have no problem paying taxes for police, healthcare, infrastructure, etc... But to pay blindly up to 35% of MY money to cover a never-ending cycle of debt that only aids the debasing of the worlds reserve currency to the point that it is near collapse is unacceptable.

    I encourage, nay, I implore any that reads this to do your own research. You don't have to go to cnn or fox, or even infowars. All that matters is that you realize it for yourself. Nothing convinces more than the truth. Even if you open your wallet or reach into your pocket & pull out a dollar, it says that "this note is legal tender for all debts.." It does not denote currency, it denotes debt. If all debts were paid, there would be no currency in circulation. The interest owed to the Fed can never be paid off. Debt = slavery.

  16. GL Gone says:

    WOW.....I have been reading A LOT on the web lately. I have also been a non resident for the past 10 years. I watched, in awe, you all elect ?????? someone from ?????somewhere, that knows???? something about ?????? and immediately after you elected this ???? you all owe 1 added trillion dollars to what you already owed.

    In the morning, after reading all what I have......I am changing my holdings to ANYTHING other than the dollar....The Mexican Peso will soon be worth more...
    mark the words...the end is near...for sure.

  17. E Rock says:

    Wow... I love the comment where raising the top rate to 39.6% wasn't "that much" and how it's "only fair". Sure doesn't seem fair to me, and no, I'm nowhere near that bracket. You can't just keep raising taxes on the rich to make up a shortfall. All we'll do is cause a mass exodus of the wealthy, then we'll really be screwed. You do realize that taking wealth from the rich and giving it to the poor is basially communism, right?

    I have seen this unequal taxation from the inside and all it does is cost us, the middle class, in the end. I did all the accounting for a small business for years that had gross receipts of several million dollars. The owners were always trying to grow and expand their business. When income and business tax rates increased, it cost them around $75,000 a year. Did they cancel vacations, or sell a boat or car, or change their spending habits? No.... they downsized their expansion plans and let two employees go.

    That's the net effect when you raise taxes only on the wealthy and businesses. What doesn't seem fair to me is that we have something like 60 million people in this country that pay no taxes AT ALL.

    The REAL problem is that our tax money is used unwisely and unefficiently by our government almost to the point of criminality, and their solution to make up for it is always taking more.

  18. SmallBigs says:

    President Obama's proposed national health insurance for all, particularly for those who don't even work and aren't covered by health insurance will greatly jack up federal tax rates for all. Don't believe the fantasy that the governmental national health insurance plan can be easily paid by a stiff tax increase for just the so-called wealthy types (those with incomes in excess of $250,000). If there's a tax increase, the tax bracket rates will increase for middle class people as well. Sure, raising taxes on the middle class doesn't make sense in this recession, but it's the only way the federal government and Obama will be able to pay for his aggressive socialist agenda.

    Governmental tax coffers and tax revenue have already dropped due to plunging American wealth so a tax increase across the board is the only way they'll be able to pay for all of the projects. I'm sure Obama already regrets making the promise that middle tax rates won't increase. Rest assured, he will be breaking this promise with the American people very soon. But then Obama, who is a typical trained lawyer is the ultimate spin meister and he has a loyal and diverse group of crazy Obama fanatics who believe he can do no wrong.

  19. Steve says:

    The current top marginal tax rates are nowhere near as high as they have been in the past. Taxes are not "always raised."

    At least 2/3 of the projected costs of the current health care proposal would be funded by savings elsewhere. The final version of any health care legislation is far from transparent at this point. What we have is a whole lot of people finally giving serious and spirited consideration to health care reform in this country. I classify this as a good thing.

    Simply put, in America, we spend a minimum of twice as much on health care (measured as a percentage of gross domestic product) than any other industrialized nation. We pay the highest costs for most prescription drugs of any industrialized nation. Small businesses are being forced to reduce benefits and perform cost-shifting to place more of the burden for health insurance costs on employees. I know this to be a fact, as I am a small business owner employing 54 people at present.

    If I maintain coverage for my employees at escalated costs, who really pays for that, ultimately? Surprise. It's the people that utilize my company's services. You.

    That is the equivalent of a hidden tax hike on every consumer. You are already paying "increased taxes" hidden as a portion of the goods and services you buy every day.

    Consider the continuing upward spiral of increased costs for health insurance and out-of-pocket health care costs in this country. Then consider that either way, you, as a consumer, are paying for those cost increases already....either in increased costs of goods and services, or as direct out-of-pocket expense.

    The current trend is unsustainable.

  20. Andrew (Ireland) says:

    As an Irish taxpayer having been exploited by the gross mismanagement of Irish finances since 1997 I have to say that the US tax regime is significantly more fair than the Irish one - the rates of tax paid and the bands across which the taxes are levied certainly seem to provide US taxpayers with more disposable income per Euro/Dollar earned, and the application of the taxes collected is (arguably) also more sensible than that employed by the Irish Public Representatives.

    At least in the US, hard work is rewarded and people seem to contribute to the public purse in proportion to their income levels, unlike here in Ireland, where the combination of a minority of wealthy individuals and a broad range of people who defraud the system are supported financially by hard working middle-income earners who are taxed at exorbitant levels, to the detriment of their own families and living standards.

    US citizens, be grateful for living where you do, and for the fairness of the system that is applied to you.

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