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2008 Federal Income Tax Brackets: Official IRS Figures

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Here are the Projected 2009 Federal Income Tax Brackets, projected in the same way and by the same people as did the last projection.

Last September a bunch of places started giving previews of the 2008 IRS tax brackets prior to the IRS revealing them, such as Kiplinger’s and the WSJ, and I wanted to compare them to the actual 2008 tables. All in all, it appears that the calculations made by the experts were spot on when compared to the figures revealed by the IRS. It makes sense though because the calculations were based on government released inflation figures. Here are the official IRS tax bracket numbers:

2008 IRS Tax Brackets

Tax Rate Single Married Filing Jointly
10% Not over $8,025 Not over $16,050
15% $8,025 – $32,550 $16,050 – $65,100
25% $32,550 – $78,850 $65,100 – $131,450
28% $78,850 – $164,550 $131,450 – $200,300
33% $164,550 – $357,700 $200,300 – $357,700
35% Over $357,700 Over $357,700

2008 IRS Deduction, Exemption & Limit Changes

Finally, all the 2008 deduction and exemption values were published by the IRS in October, here are the notable increases (or unchanged values):

  • Personal and dependency exemptions increase $100 to $3500 each.
  • Standard deduction for married couples filing jointly increases $200 to $10,900. Singles and married filing separately increases $100 to $5,450. Heads of households get a $150 increase to $8,000.
  • Maximum earned income tax credit (for low/moderate income workers and families with 2+ children) increases from $4716 to $4824. The income limit for this increased to $41,646.
  • The maximum Hope credit increases $150 to $1,800.
  • Roth IRA contribution limit phase outs begin at $101,000 (+$2k) for singles and HoH, $159,000 (+3k) for married.
  • 401(k) and 403(b) contribution limits remain unchanged at $15,500.
  • Annual limit for most defined contribution plans increases to $46,000 from $45,000.
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172 Responses to “2008 Federal Income Tax Brackets: Official IRS Figures”

  1. Wondering says:

    My husband’s taxable income is $323,245. We are now empty-nesters and I have decided to take a part-time job with maximum earning potential of about $15000.

    My husband has shared that it will not be worth-it for me to work . . . that it would put him in a higher tax bracket . . .

    But, the tax bracket tables seem to speak otherwise . . . also, gas and clothing costs are negligible.

    • Steve says:

      Currently a couple filing jointly with your husband making 323,245 you would be in the 33% tax bracket. The next break for married couples filing jointly is 357,700, or 35%. Since your husband has taxable income of 323,245, you will still be 34,455 under the next bracket which is 35%. Even if you went over the 357,000, you would only be in the 35% bracket for those dollars over 357,000. I am only a lay person and you need to talk with an accountant.

    • Eugene says:

      This is a good question, if you are going to enjoy the work, I would not consider the tax at all. The tax Uncle Sum is going to charge is not important at all.

      The more important you need to realize is to make sure you not only enjoy the work, but also do not skip the house work, you are doing every day. Also make sure no matter how much money you are going to make, you must put together with your husband, you can not keep your self.

    • Joesph says:

      If I’m not mistaken your husband’s bracket, rather filing jointly or single, is 33%. I would suggest filing seperately. This way your income is taxed 15% rather than 33%. That’s a $2,700 savings on your $15,000.

    • BURT says:

      How do you know you have Taxable Income? Where is Income defined in any Government Law? Here is a hint, you determined you have Taxable Income, the IRS and no other Government Agency tells anyone they have taxable income. The IRS only intimidates you into filling their illegal forms, which you sign, swearing that you have Taxable income, thereby giving up your rights to self incrimination, because this form can be used against you in Court. Ask the IRS, it is the dam truth.

  2. jim says:

    Wondering… sometimes it’s not about the money right? Sometimes it’s about having something to do.

  3. Russ says:

    Ryan, I almost agree with your tax proposition, but suggest a couple of minor changes:

    1: NO tax on the first $20K earned (Tax relief for the working poor)
    2: Tax all income above this at 15%

    Our tax system is SUPPOSED to be a source of revenue for the Federal Government to provide “only those services that the local and State governments cannot provide” such as Interstates, etc.

    Why, then, is this used as a welfare system? Those that do not pay into the tax system get Credits and HUGE refunds.

    • kanesia says:

      I get a tax ex for having two kids and being poor! I pay taxes just like everyone else does. Last year I did a program called welfare to work where they took extra money out of my check each week towards medicare and all that mumbo but I didnt get as much back at the end of the year.

  4. Kelly says:

    can anyone give me an IRS referance code or tell me where it says that our income is legal to be taxed by the IRS. Back in 1913 the gov proposed the law to make it legal to tax everyone income and it was denied and again in1953. Please someone show me with a factual comment back and add your IRS referance. People have challenged in court this illegal taxation by the IRS and have one and those people do not pay taxes on their income. One of persons is a pilot for an airline.

    Thanks in advance

    • Tammy says:

      See irs website below for brief history of taxsation.

      http://www.irs.gov/irs/article/0,,id=149200,00.html

      • BURT says:

        Tammy, you are either stupid or pretending to be stupid. Do you see a Law mentioned anywhere in the page you quoted? The sixteenth Amendment was declared by the Supreme Court as granting no new powers to Tax. Congress must pass a Law to effect anything it does.
        Stop drinking the KOOLAID and grow up. You are being raped and you like it.

    • Ryan says:

      U.S. Code Title 26

      Yes, it exists. No, people cannot get away without paying taxes. If they aren’t paying them it’s only because there are a bunch of messy IRS issues and they don’t have the manpower to audit every single person. Being able to live in the US without being taxed is more of a lottery pick due to lack of manpower to investigate every case rather than a civil disobedience miracle.

      However, the problem that most people relate this claim to is that it is technically unconstitutional. From a legislative and executive perspective, this isn’t much of an issue. The supreme court hasn’t heard a case that challenges the constitutionality of income tax because if nobody had to pay, the entire government would freeze up and the United States would be thrown into a completely fractured collection of states. I’m not sure of many judges that would even want to hear that case.

      • BURT says:

        your are Wrong, Income Taxes are use to pay the scam related to the Federal Reserve. The Supreme Court has heard cases on the Income Tax, and every time determined that only Corporations are to pay on their gains. Lower Court Judges are all corrupt and will not even allow the IRS Code to be introduced as evidence in any case involving the Income Tax. Please find the Statute that makes non corporations Liable for an income tax and let us all know about it. People have be found innocent in court cases because the IRS could not show such Law, so there.

    • Chris says:

      The 16th Amendment to the Constitution states:

      “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

      It was ratified by 36 out of 48 states and was put into effect 02/13/1913.

  5. David says:

    I make 61K and my wife makes $250K.

    Should I quit work and be a house husband or what are the ways of legally avoiding more taxes to pay.

    I hate to see that I work for nothing and my paycheck goes to taxes at year end.

    • Mark says:

      David,
      Every dollar you earn gives you more money at the end of the day. Yes…. you will be taxed at a higher tax bracket at the end of the year but you can shelter 15.5k in your 401k. Be thankful that your wife makes so much money.

  6. Rob says:

    @wondering:

    Your husband is incorrect, at least for the 2008 tax brackets. Your income won’t bump the two of you into a higher bracket based on the numbers presented.

    Surely making that kind of money you guys have a tax accountant right? Ask him or her. You guys should be sheltering as much money as you can, assuming your lifestyle would permit it. Your husband should be fully funding his 401K, and if you’re empty-nesters, he’s likely close enough to retirement to be eligible for “catch up” contributions as well, letting you shelter up to half your income or near it by putting it in the 401K. Beyond that you should have a fully funded traditional IRA sinc eyou haven’t been eligible for a 401K while not working & your proposed job’s max salary would about cover funding that. Beyond that if you plan on helping w/ grandkids’ (or current kids’) college costs, you can contribute to a 529 college savings plan. All of these things (401K/403B, Traditional IRA and 529 College Savings plans) are built to reduce your tax liability and encourage savings.

    At your age & income level, your CPA or tax guy should be able to figure out how to shelter at least 50-75% of your gross pay by using these methods. Of course that means that you’d have to be able to live on what’s left. Can’t shelter it and spend it at the same time, with the exception of the 529 plans in case you currently have kids in college

    • td off says:

      Love it!!! The more you make, the more you can shelter. It’s us poor suckers making $150k that can’t afford a tax accountant and are paying taxes out our you-know-what.

      Sheltering is another way to say cheating. Why don’t we all just pay our own fair share?

      • Bill says:

        Poor Sucker making $150,000…I have been in the Marine Corps for eleven years as an electrical engineer and don’t make a third of that…quite crying.

        • Terry Bryant says:

          get out and get a real job

          • Navy Recruiter says:

            Quit picking on the military folk when you don’t have the guts to have ever served one term. People are more scared of what they don’t know or understand. Try telling some of the people who I have recruited after going to college for 4 years and earning a bachelor’s degree, and can’t find a job because mommy and daddy told them that college was the only they could do to have a successful life. Thanks Jennifer for the military support for my fellow brothers and sisters in arms, no matter what branch.

          • Irked says:

            Terry Bryant, you should be ashamed of what you replied. It’s obvious your parents should have done a better job in teaching you manners!

        • Jennifer says:

          Bill,
          Thanks for your dedicated service. Don’t listen to Terry B. to get out and get a real job. You may be tempted to get a real job, but look at all those other people who thought they had a cushy job for life and are now unemployed! I retired after 30 yrs in the USAF. There were many times I considered getting a real job, Boy, am I glad I stayed in! Believe it or not, it gets better after 20!

          • K.Nabozny says:

            I think ALL military should make way more money. Anyone who thinks different needs to join up for a bout a week or two, you’ll change your attitude

  7. bruce says:

    Whoever mentioned the 0% Long Term Capital Gains for 2008, 2009 and 2010 was correct. However, there is a complicated method for computing this, so I would suggest Googling the topic and a worksheet will pop up. One thing that will reduce the amount taxed at the 0% rate is if you have a loss for these years. So the object is to only sell stocks that have a profit. Sorry I can’t post a link to where you can get this worksheet.

  8. Grandma says:

    Can i take out a527 for each of my six grandchildren max each at 2500 Will my tax deduction be only 2500 or15000 2500×6

  9. Grandma says:

    Back in 1996 tax advisor told me not to convert my IRA to a Roth. !!!!! I’m requirred to take my RD (each yr the % goes up) add it to my income and taxed at standard rate…At what point would it make sence to convert my IRA to aRoth ????

  10. clark09 says:

    my husband and i just got married in April. Last year he made 57,000 because he started a new job in April of last year and they withheld. He recieved 10,430 refund. Now He has made 69,000 already and have paid federal taxes of 19,000+. At the end of the year it will be 20,000 or more. I am a student and doesn’t work. Will he get a refund next year?

    • Joesph says:

      Even without any deductions your husband should still receive a refund. He will be in the 25% bracket which means he should be taxed about $18750 if he makes $75000 for the year. So you could still expect a return but nowhere near as much as last year.

  11. Amy says:

    My husband and I just finished our masters this year and for the first time in 11 years are actually making money to live off of. Together we made $150,000 in 2008, but we cashed in our IRA (15,000) and our mutual fund (7,000) for a downpayment on a house. I just found out we make too much for childcare credit and hope lifetime credit! I think I will end up paying thousands out of pocket on taxes and am scared.

    We sold our house in 2006 and closed June 27th and we just purchased and closed june 10th fo this year. Does that count for 2 years for our IRA/Mutual fund (to decrease penalties)? How do you claim IRA or mutual funds? Are they capital gains, dividends…I should have gone to school and become a tax attorney!

    Amy

    • Wanda says:

      Welcome to the Republican Party! Sucks doesn’t it? Paying all this money in taxes after working your butt off studying and struggling just to fork it over when you finally start making it, to the lazy people not willing to sacrifice their party time or TV time so they can get ahead too?

      • James says:

        Try not to blame any particular political party. Both parties have their financial faults. But think about this for a minute. Someone who is making $150,000 to be able to live off of? Instead of blaming losing money on the lazy people, which I am in totally agreement that it is BS that they won’t work as well, but look at the people complaining about paying taxes when they have a $500,000 to $1.5 million dollar homes, drive expensive cars, only feel that private school are the only way a child will get a decent education, and paying someone else to watch their kids when it is not necessary. Yes, different areas of the country have higher costs of living so I am factoring in that as well. But don’t complain that it is so hard to live off $150,000 when I am married, have 2 children, been in the military for 7 1/2 years and am living very comfortably making $60,000 myself and my wife doesn’t even work and is going to school to finish her BA.

        • toledowizard says:

          This must be the website for the semi-wealthy. Are you people joking? I was married last year and I’ve worked my butt off everyday for the last 17 years. We pay our bills and take care of our kids. And we’re taxed just like everyone else. Don’t act so great because you make more than little people like us. When my refund comes, I pay my bills. How the hell does that make me lazy? Please explain to me how working 40+ hours a week for 17 years makes me lazy?!!

          • brandon says:

            im in total agreement with you, i work 40-60 hours per week 3rd shift and still only bring home approximatly 20,000 a year, and the government takes about 10-13 percent out of every paycheck, im a single male living on my own and struggle from day to day, i dont concider myself to be lazy, i work just as hard as anyone.

  12. Sarrah Palin says:

    It is so nice to see all you folksy “Joe the Plummer” types getting information about those nasty taxes the democrats want to raise. You know, so they can take your money and give it to someone else. It gives me such a nice down home warm feeling to see people helping each other out.

    Our tax plan will make it so John Mccain and other average folks like him and you won’t have to pay so much in taxes. How many people that own 7 houses can afford to pay more taxes? Not John McCain, that’s for sure. We’re going to make sure the John McCains and Joes the Plumbers can have more of their own money. You see since the rich people make so much money, if we cut their taxes they can buy more stuff and then there will be more money in the economy and you all will make more money. Now wouldn’t that be wonderful. They could just pay people more but then they wouldn’t have as much fun with their money.

    Thanks to all of you for your support. If you want to give us a donation since we’re gonna lower your taxes, it’ll help in the fight to beat “that one” in the next election in just a few days folks.

    Now get out there and vote and lets get the first hockey mom in the WhiteHouse. We’ll ban that “gotcha” journalism, keep the bad books out of the libraries and put god first.

  13. Anonymous says:

    I don’t think there has been one answer to a question asked on this board.

  14. anomynous says:

    YES, sarah palin. i worship anything you say because i hate abortion and want to see a woman vice president.

  15. woo says:

    It is unfortunate that in your eagerness to see a woman as vice-president that you are not concerned about her ability to fulfill the duties, her knowledge (lack of about world matters and the VP responsibilities), or her ability to step in and be president if necessary. Just a few months ago she said that she would not be interested in running for VP until someone can tell her what the VP does. And, she still doesn’t know as is evident in the interviews when they ask her.
    If you ever get some additional mental energy or cognitive ability think about what you are saying. It is fine to like her as a person, but she would be clueless as VP or President.
    Moreover, it is ironic that she advocates abstinence only sex-ed and her unwed teenage daughter is pregnant. How pathetic; she can’t manage her own children and wants to talk to the country about sex education. Why didn’t her daughter abstain if its so effective and right? The list of her weaknesses goes on and on. No one is perfect but she is so far out of her league on this one, it is just a joke at this point. Voting for someone b/c she is a woman or b/c she seems like a maverick- is just a joke. We can’t afford anymore experiments at the Executive level.

    • Voice of Reason says:

      You are a hypocrite and judgmental. Check all your facts. Your President elect was televised saying he was not considering the Presidency as he did not believe in taking a position he was not trained for. So this is the biggest experiment being played out in Wash. That’s the “head” guy you have instead of a VP that at least had some degree of leadership in Government. And the worst is bringing her daughter into the mix. Obviously you have not had any teenagers. Just because you tell them things doesn’t mean they listen. Chastity belts are out you know. I raised 5 kids and as teens I worried everyday of what “mistakes” they might make and prayed they had paid attention to me. So stop blaming Palin as a mother because she had a teen who thought she knew more. Praise the daughter and the mother for accepting the responsibility of raising that child. I was an unwed mother at 19 and believe me it had nothing to do with my parents.

  16. CPA says:

    Kelly – 16th Amendement of the US Constitution

  17. tf anonymous says:

    I am married, we have a combined income of give or take $80 k. We unfortunately don’t have any kids. Would if we could. We claim “0″ and pay extra throughout the year, then we still have to pay in. This doesn’t seem right. We are also always just about 1k short of being able to itemize with our many doctor expenses. Is there anything we could be doing differently here in missouri? We are also still paying college loans and c.c. expenses, along with some terrible doctor bills for various reasons, so times have been really tough.

    • Chris says:

      Buy a house. Use the interest deduction to be able to itemize. There is no reason that you claim zero and have to pay in. Whomever does your taxes, may not be doing them correctly.

      • Joesph says:

        Make sure you claim those high medical bills. I know they always ask us if we have any large medical expenses. Also make sure you’re claiming the interest paid on those college loans, they aren’t taxed, and you should have a statement saying how much you paid for the year. That can save you a lot of money.

  18. eleni says:

    I receive $100K annually in rent (triple net, 20 year lease) from a building I own in CA. The rent is paid monthly. There is no debt on the building and there is a annual escalation clause tied to the CPI. I also receive 35K annually in SS payments. My deductions come to about $30K each year. Those two income sources make up my taxable income. I am domiciled in FL.

    Would I have more after-tax income if I sold the building and used the proceeds to purchase a tax free municipal bond fund, say, FKTIX, currently yielding 4.89% and is AMT free? I would have the dividends from the fund paid to me monthly and not have them re-invested. I do not anticipate the need to ever sell the bond fund. I currently own shares in FKTIX and in OPITX from which I also derive monthly essentially tax free income and I don’t anticipate the need to ever sell these funds either..

    • Mark says:

      It depends on the net amount received from the sale of the property minus your original cost. Then you will have to pay taxes on the gain. Unless it is worth more then 1750000, I would not worry about it.

  19. Gary says:

    I took a new job in a new city with a new company in 1985. I asked that I be paid on a commission only basis what I sold I got paid for, period! (I was 1 of 3 people that started the company). We were wildly successful and my income beyond my dreams. I commented about the taxes to one of the partners. I will always remember his answer…. The more taxes you pay the more that you have earned… Consider it a report card on your success.
    I have never complained about my taxes since as he was and still is absolutely right. We all want good roads, nice parks, police and fire protection, and on and on. If you are hungry you pay for food, if you want services provided by the government, those too, you must pay for.

    • Daniel says:

      gary i dont think most people would complain about paying taxes if they ever figured out a way to budget the money correctly,i also work for myself and pay alot in taxes, but every time you turn the news on they need more money, the national debt is getting bigger, we aren’t gonna have social security in 10 years so on and so on you get the picture. i just want some accountability if all balanced are check books like congress does we would all be out of business?? we need accountabilty one source balances every thing 2 years of screwing it up your out. at some time there will be a breaking point america needs to wake up all this zero down no intrest no payments for two years crap is catching up with us the only thing people should finance is houses and cars if you cant save up for it within a year then you dont need or just cant afford that flat screen television or whatever it is.?!

  20. Brenda Rosenthal says:

    We live in Florida. For 2008 has it been decided whether you can deduct your sales tax on your income tax?
    Also is the state sales tax you pay for gasoline also deductible or not deductible?
    If you can answer these questions, can you send me to the site that verifies the information?
    Thanks
    Brenda

  21. Vera says:

    I have 221 K in my traditional IRA & would like to withdraw it all, what tax would I be paying, I am sixty years old & retired, my husband made 60 K this year, we file taxes jointly?
    Thank you for your advice

  22. Amber says:

    so…i guess im really confused! I’m just trying to find out what the amount a single person is allowed to make is without going into the next tax bracket. i don’t really get into all this percentage stuff! i just need to know a number

    • blerina says:

      your question doesn’t make much sense, if you look at the table above it tells you how much a single person can make and what the percentage you will pay on that income. If you’re asking how much is let’s say 15% of 20,000 you can calculate this with a basic calculator which you may purchase at your local walmart it sounds like you frequent this store very often. :)

  23. Confused says:

    Do you figure out your tax bracket by your gross wages? Or is it your gross wages minus your deductions, then you use THAT number to figure out your tax bracket? Someone please help me!

    • runner4rice says:

      You use your net income, after taking deductions from your gross income. This net income is then taxed marginally according to the tax bracket above. For example:

      If you made $200,000 in income, interest payments, dividends, etc and had $50,000 in deductions, you would have $150,000 in taxable income. This would then be taxed at the appropriate rates, as follows:

      10% Bracket = First $8025 or earnings = $803
      15% Bracket = Next $24525 (32550-8025) = $3679
      25% Bracket = Next $46300 (78850-32550) = $11575
      28% Bracket = Next 71150 (150000-78850) = $19922
      Total taxes paid = $35978 = 24% of Net Income

  24. HEATHER says:

    i have a question if i made @8000 for the year and i have a child that i am claiming how much do you think that ill get back? i live in massachusetts

  25. ann says:

    if i make less then 3,000.00 a year and don;t have any taxes taken out of my paycheck will i get money back all so i have 3 kids

    • Anonymous says:

      making 3000 a year how do you support those children? If someone else can claim them as dependents based on that, it will make a difference in your taxes. As far as getting money back, I think the only thing available to non-taxpayers is if they didn’t get the stimulus check they were entitled to this past year.

      • Chris says:

        make 3k, and have 3 kids? You should have kept your legs closed!

        • blerina says:

          guess who is paying for her 3kids and this deadbeat oh yeah you and me and she wants to get money back when she never paid anything to IRS. Must be nice


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