Due to inflation adjustments, tax brackets are set to widen in 2009. The IRS announced the new personal exemption and standard deduction amounts on October 16, 2008.
The key changes that will affect 2009 tax brackets include the following:
- The new personal and dependency exemption amounts will be $3,650, up $150 from 2008.
- The new standard deduction for married couples is $11,400 for a joint return. This is up $500. For singles and married filing separately it will be $5,700, up $250. For heads of household it will be $8,350, up $350.
- The tax-bracket thresholds will also be increasing for each filing status.
- The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $5,028, up from $4,824. The income limit for the credit for joint return filers with two or more children is $43,415, up from $41,646.
- The annual gift exclusion is also up for 2009. It will be $13,000, up from $12,000 in 2008.