Wednesday, September 3, 2008

Tax Brackets

The brackets for both 2007 and 2008 have been adjusted for inflation, and that's probably good news for you.

Income-tax rates are unchanged for 2007, but as happens every year, the Internal Revenue Service has adjusted tax brackets to account for inflation. Expanding the brackets means that a touch more of your income will be taxed at lower rates than might have been the case last year.

That will mean savings for you.

The IRS is required by law to adjust the dollar amounts for a variety of tax provisions each year to keep pace with inflation. The adjustments of tax brackets, standard deductions, personal exemptions, earned-income credits and other things affect about three dozen areas of tax rules.

The IRS publishes the next year's tax rates in the fall.

So 2008 tax brackets, as well as amounts for standard deductions, personal exemptions and other tax areas, are already published. You can get more information on 2008 tax law changes here.

Taxable Income and Tax
Not over $16,050 10% of the taxable income

Over $16,050 but
$1,605 plus 15% of
not over $65,100 the excess over $16,050

Over $65,100 but $8,962.50 plus 25% of
not over $131,450 the excess over $65,100

Over $131,450 but $25,550 plus 28% of
not over $200,300 the excess over $131,450

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