IRS adjusts tax brackets for inflation

New Orleans CityBusiness November 9, 2006 | CityBusiness Staff Report Personal exemptions and standard deductions will rise, tax brackets will widen and income limits for individual retirement accounts will increase in 2007 based on inflation adjustments announced today by the Internal Revenue Service.

The new standard deduction will be $10,700 for married couples filing a joint return, up $400 from last year, $5,350 for singles and married individuals filing separately, up $200, and $7,850 for heads of household, up $300. go to site 2012 tax brackets

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. website 2012 tax brackets

By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits, affecting virtually every taxpayer, are being adjusted for 2007.

Tax-bracket thresholds will 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 will be $63,700, up from $61,300 in 2006.

In 2007, for the first time, inflation adjustments will raise the income limits that apply to the retirement savings contributions credit, contributions to a Roth IRA and deductible contributions to a traditional IRA where the taxpayer or the taxpayer’s spouse is covered by a retirement plan at work.

CityBusiness Staff Report