Changes in Tax Brackets and Benefits for 2010
For 2010, personal exemptions and standard deductions will change only slightly to reflect inflation adjustments. Many levels will remain consistent with 2009.
By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result of little inflation, there will be no significant changes for 2010. The following is a brief review of some of the key levels effecting 2010 returns, filed by most taxpayers in early 2011, include the following:
- The value of each personal and dependency exemption, available to most taxpayers, will remain at the same level of $3,650, no change from 2009.
- The new standard deduction is $11,400 for married couples filing a joint return in 2010 (no change from 2009), and $5,700 for singles and married individuals filing separately (again, no change from 2009. The Head of Household standard deduction increased slightly to $8,400 for heads of household (up from $8,350 in 2009). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.
- Tax-bracket thresholds increase slightly for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $68,000, up from $67,900 in 2009.
- 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 will remain at $13,000, same as 2009.
Chuck is managing partner of Chuckuemeka & Associates, a nationally focused CPA firm specializing in Accounting, Auditing, Consulting and Tax Advising.