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Federal Tax Brackets 2010

Published 10/7/09 (Modified 6/17/11)
By MoneyBlueBook

Federal Tax Brackets 2010

Death and taxes. You can try to fight them both tooth and nail, but at the end of it all, it's a losing proposition. Especially when it comes to taxes, the government is going to want its fair share cut of your salary and business profits one way or another, whether you like it or not. Rather than engage in tax evasion and possibly live the remaining years of your life on the run as a tax fugitive from the long arm of the Internal Revenue Service (IRS), you might as well confront the issue of taxes head on. All we can do is try our best to understand how income taxes work and take reasonable steps to minimize their effects on our financial lives as much as possible.

One of the most introductory ways to plan for the effects of income taxes is to recognize how the various marginal rates are applied to the corresponding tax brackets. Because the United States does not yet currently engage in a flat tax system, our taxable incomes are broken down into different taxation ranges with specific taxation percentages assessed depending on where they fall along the tax bracket spectrum. Although our 2010 tax returns won't be filed until April 15, 2011, for planning purposes, it's always good to find out the new changes to the tax code as early as possible. Let's examine some of the upcoming tax rate changes that are being projected for 2010 and compare them to the previous year's 2009 tax brackets.

Projections Of New IRS Tax Rates Have Historically Been Extremely Accurate

Year after year, even before the official IRS income tax brackets are released, a select number of tax experts have gotten together and crunched a determinative number of officially released statistics by governmental agencies - to project and extrapolate the upcoming year's tax brackets. Year after year, the tax rate predictions released by these groups have yielded results in advance with near 100% accuracy. Such an income tax bracket projection ahead of time is possible because many of the major tax code numbers are pegged to officially released inflation statistics - including the standard deduction, the personal exemption, the actual income ranges of the tax brackets, and contributions limits for the investment retirement accounts (both the Traditional and Roth IRA account).

One of these tax prognosticating groups is the Tax Foundation, a Washington D.C. think tank which collects data and publishes research studies on federal and state tax policies. The other notable group operates under the auspices of the Wall Street Journal and is comprised of a merry band of private tax professionals and economists - namely William E. Massey, a senior tax analyst from the Tax and Accounting arm of Thomson Reuters; George Jones, a senior federal tax analyst from CCH; and James C. Young, an accounting professor from Northern Illinois University. For numerous years now, both the Tax Foundation and the Wall Street Journal group have consistently released to the public very accurate, albeit unofficial, early bird peaks at the following year's projected income tax brackets based on available financial data - well in advance of the official IRS releases. If you're eager to get a head start on tax year 2010, read on.

IRS Tax Rate Schedule Updates For Tax Year 2010

This year, citing a very sluggish economy and extraordinarily low inflation rates for 2009 to which upcoming 2010 tax rates shall be pegged to, the Tax Foundation and associated experts are predicting very little year to year change for the 2010 federal tax brackets. If there's anything good that came out of this global economic recession that has been plaguing us for the entirety of 2009 - it's that the combination of low gas prices, depressed consumer spending, and high jobless numbers with so many people filing for unemployment - have enabled inflation rates to stay quite low during the span of 2009 - at a mere 0.19%. Just compare that to the incredibly high inflation rate of 4.26% during the previous year of 2008 when gas prices were skyrocketing, and it's clear the recent sudden and precipitous drop in inflation has been extremely unprecedented.

As a result of low inflation, for the most part the 2010 tax bracket ranges will likely stay relatively unchanged. As noted by the tax pundits, for the very first time since the IRS started to index the official federal income tax rates to inflation during the mid 1980's, taxpayers will get virtually no significant benefit from inflation in 2010. As such - year 2010 tax brackets, standard deductions, personal exemptions, and even retirement account contribution limits will see very little (if any) alterations from prior year numbers.

I will update the table below to reflect the official IRS tax rates for 2010 if decidedly different numbers are ultimately released by the IRS. However, with tax bracket projections by the experts having enjoyed a near perfect accuracy rate for quite a few years now, I don't have any reason to doubt that the displayed figures below will ultimately wind up as official.

Federal Income Tax Brackets For 2010 - Based On Taxable Income Ranges

Tax Rate
Married Couples Filing Jointly
Most Single Filers
10% Not over $16,750 Not over $8,375
15% $16,750 – $68,000 $8,375 – $34,000
25% $68,000 – $137,300 $34,000 – $82,400
28% $137,300 – $209,250 $82,400 – $171,850
33% $209,250 – $373,650 $171,850 – $373,650
35% Over $373,650 Over $373,650

Beyond some slight numerical shuffling of the taxable income ranges, there will not be too many significant tax changes from 2009 into 2010. Here is a breakdown of the projected changes (if any) for 2010 as they compare to the prior year:

  • Personal Exemption: No change. For the very first time, the standard exemption for 2010 will not be going up and will stay unchanged at $3,650, the same as it was in 2009.
  • Standard Deduction: No change, except for Head Of Household filers. The standard deduction for married couples filing jointly will remain unchanged at $11,400. For those filing as single, the standard deduction will remain at $5,700 as well. However, Head of Household filers will see a slight increase by $50 - from $8,350 (year 2009) to $8,400 (year 2010).
  • Overall Tax Bracket Thresholds: Will increase across the board for all tax filing statuses, albeit at a significantly lower amount compared to past tax year increases.
  • Annual Gift Tax Exclusion Amount: No change. For tax year 2010, the current gift tax exclusion limit of $13,000 will stay the same. Often overlooked by most taxpayers, the gift tax stipulates that gift givers must pay a special tax on gift amounts that exceed a certain amount per year.
  • Traditional and Roth IRA Contribution Limits: No change. Despite the fact that IRA and Roth IRA contribution limits did not rise in 2009 in response to strong inflationary pressures in 2009, there will still be no corresponding change in the maximum contribution limits to individual retirement accounts for 2010. The standard IRA contribution limit for 2010 will remain unchanged at $5,000. The catch up contribution limit for those 50 or older will remain at $6,000 as well.

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436 Responses to “Federal Tax Brackets 2010 | Income Tax Brackets 2010 | Money Blue Book” 

  1. Greenman says:

    Where's the reward for being successful? Being solidly in the 25% bracket, we pay our fair share as productive citizens. Last year's filings were quite an eye opener from previous ones (and we know the reasons why). We live a moderately frugal life, and will definitely get more aggressive in maximizing what advantages still remain for small business owners.

  2. Financial Samurai says:

    It is disappointing to have to pay 35% of income to the gov't. This is why the mortgage interest deduction is so much more powerful for a high income earner than a lower one.

  3. Pat says:

    Why can't this federal government and the President Barack Obama administration get together and come up with a fairer tax system? Why are they fussing around with health care when taxes have a greater universal impact on our lives?

    It's time we abolish the existing marginal tax rates and throw out the existing and cumbersome tax codes...and replace them with a flat tax of say 5 to 10% and then impose a stiffer sales tax on products and services based on consumption instead. I'm sick of paying out so much money in the form of taxes when I don't even consume all that much resources in this economy. I've been trying to save for an emergency fund but it's nearly impossible with all of the hefty income taxes (both state and federal) that I have to keep shelling out.

    Meanwhile, all of the rich tycoons and CEO's are able to bypass the high tax brackets through tax shelters like the home mortgage deduction and buy all of the yachts and expensive indulgences they want. It's not fair!

  4. Gwen says:

    Those of you rich folks in the top 35% tax bracket need to stop whining. You don't get to whine. I hope this administration taxes the beejesus out of you all...it's time you paid your fair share and get with the program. It's only fair the wealthy pay more out of their millions and billions of dollars to subsidize the rest of us who need it the most. We are struggling in this recession and it's time to fix the problem - by taxing the rich!

  5. Financial Samurai says:

    Gwen - Socialists unite! :)

  6. John DeFlumeri Jr says:

    Nice info that helps us plan for 09 tax filing. Thanks.

  7. GC says:

    umm...by wealthy you mean all those doctors, lawyers, businessmen and double-earner families of mid-level exec + nurse or some such combination, right? I mean, those in the 28% and up categories are not all filthy-rich idle millionaires.

    I get tired of people telling me that after my husband completes his seemingly endless education & training in medicine (right now he's making less than most first-year teachers) he deserves to pay out 28% of his income in taxes (or even better, that he should pay more!) while at the same time not being able to claim any deductions for his college & medical school loans (which are comparable to a good-size mortgage for many). We'll be paying those off for decades--but since we're so "rich" we should be taxed out the behind. Right. So that's the reward for people who scrimp, save, borrow, and work hard to better themselves.

  8. lolalarvale says:

    Maybe if corporate tax rates were higher than individual tax rates, all the whinny "rich" boys & girls (who think they aren't already rewarded by their buying power & status, considering $373K a year translates to roughly $1.02K per day before taxes which is what some of us "poorer" kids make per month) would be happier. Could someone explain the logic behind an $18m corporation paying the same tax rate as an individual earning $373K? If the government held corporations more accountable, the government wouldn't be digging so deeply into the upper crust's pockets...and so obviously pissing them off.

  9. Ike says:

    The gov't needs to get out of our lives and stop giving those that would rather not work a free ride. Less GOV'T = less gov't spending = less taxes needed. People need to be responsible for themselves. Most politicians could not run a business unless they had a open ended checkbook, for it is evedent they do not understand you cannot spend more than you have.

  10. PatH says:

    Does anyone know if there any any tax implications if a non-resident alien spouse sends over $10,000 to his/her spouse in USA. Does the American spouse have to show this as income for tax purposes?

  11. why work three jobs to get ahead says:

    I am working a full-time and two part-time jobs. I am trying to save, pay off my student loans and then buy a house (and hopefully buy a newer car than the 1993 vehicle I drive right now). I am also planning on having kids in a couple of years (after I pay these things off). I am working day and night, Sunday through Friday. Why? So the more I make, the more I can give to the government. What is the point? I might use government services (like the road and later schools, etc), but if we had a flat percentage rate, I would still be paying more than someone working less, or getting paid less overall. Why would I get taxed a higher percentage? This makes no sense. I am not using governmental services more often. In the past, I have always been in the lower tax brackets and I had never looked to see how much more I would be taxed for making more money (until now, because I have three jobs).

  12. jd says:

    Hey lola-

    Corporations are us. There isn't some "magical" corporation out there. The owners of all those businesses you always hear about are your neighbors (who own their stock). And we're sick of having to pay taxes twice on our earnings-once when our corporation earns it and once when we pay it to ourselves as dividends. There's no magic pot of money out there to pay for government functions. It all comes from us.

    Our tax system is progressive enough as it is. If you're truly a $1000K/month earner, you don't pay taxes, they pay you. In fact, over 40% of the households in this country don't pay ANY federal income tax. How is that fair? You don't drive on the roads? The soldiers and police don't defend your home?

    The "rich" are getting socked enough as it is. They pay more in health care insurance to cover those who don't carry it because they "can't afford it." Then they pay more in taxes to cover those on disability, medicaid, WIC, HUD etc etc etc. You think everyone on disability can't work? You think everyone on medicaid/disability spends the dollars responsibly and gets off as soon as they can? Welcome back from fantasy land. They can't deduct student loan interest. They lose the earned income credit, the retirement savings credit, the exemptions on their kids, the ability to use a Roth IRA or deduct a traditional IRA etc etc etc.

    I don't mind a progressive tax system and paying a higher percentage of my income then those who make less, but everyone needs to pay something. For most middle class Americans federal income tax is INCOME TO THEM, not a payment they have to make. Meanwhile, they're buying McMansions and running up their credit card bills and making those of us responsible enough to make the payments we've agreed to foot the bill and bail them out. This stupid $250 stimulus Obama is giving to seniors is another stupid handout. Social security is indexed to inflation. Guess what? We had negative inflation this year (deflation) so social security payments should go down? Who ever told you they were supposed to go up every year? The pussies in Congress are afraid to say no. They rather we go bankrupt. But when they decide bankrupt is a bad idea what do they do? Oh, the rich can pay. Send them the bill.

    I've been poor, and I've been "rich." I chose to eat beans and rice, go to school, work hard, and sacrifice. Don't feel like you're entitled to the wealth I'm creating by busting my ass. Go make your own.

  13. jd says:

    P.S. This "rich guy" is in the 25% bracket. But I hope to be in the 33% bracket soon. But hopefully because I'm making more money, and not because Congress decided to raise my taxes again.

  14. BB says:

    That government that governs best governs least. Mr Obama, get your hands out of my wallet!

  15. jeff says:

    If everybody would mind their own business they wouldn't be griping so much. Money will come and go, some people were blessed with riches. Others were not. Alot of people inherited their riches and we are not allowed to be mad at them for what their family created for them. I am unfortunately unwealthy, but money can not buy happiness. I have a beautiful wife and kids, I am just fine. You cant go on living life stressing all the small things. You could be living on the streets or in a shelter somewhere, be fortunate that you are able to write these comments. God bless!

  16. Jonathag says:

    Anyone in the higher tax brackets SHOULD GET TO KEEP THEIR MONEY! Taxing the rich more sucks!! Oh and for the record, I have been in the 15% bracket most of my adult life, so I am not rich!!

    Anybody that makes big dollars has obviously worked hard to get where they are, and they deserve every bit of money they make! And if someone has gotten rich by exploiting loop holes in the system, well they are smarter than you aren't they?? Knowledge is power, so if someone knows a trick or two that allows them to keep their money, more power to them! Enough of our money goes out to crap that will never do us or our families any good, and that we would not necessarily want to give money to in the first place!

    For anyone that is jealous of the people in the higher tax brackets, I say, go take advantage of some government money and go back to school and get your Master's Degree or your Doctorate and work hard at it, don't sit around and cry that the rich should be taxed more to support people that don't want to go out and make something out of themselves. And, for the record, I don't even have an associates degree, I'm just a die hard conservative who thinks that hard work should be rewarded, and laziness should be penalized. This stupid country has it completely backwards!!

    I know there are plenty of people that are not lazy and who work hard, but there are also plenty of lazy people who think the rich, who have succeeded in their field, should support their lazy lifestyles, and that is just wrong!

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