IRS Increases Dollar Amounts On Tax Provisions

While President-elect Obama modifies his initial tax plans as a result of the current economic crisis, the Internal Revenue service has by law revised various dollar amounts on various tax provisions in order to keep pace with inflation. These revisions include the personal and dependency exemption, the standard deduction, the earned income credit, and the annual gift exclusion.

• The value of each personal and dependency exemption, available to most taxpayers, is $3,650, up $150 from 2008.
  
• The new standard deduction is $11,400 for married couples filing a joint return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household (up $350). 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 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 $67,900, up from $65,100 in 2008.
  
• 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 rises to $13,000, up from $12,000 in 2008.