A Preview of the 2008 Federal Income Tax Brackets

September 26, 2007

Here’s a look at the expected Federal Income Tax brackets for 2008. The official brackets from the IRS won’t be available until later this year. I found these numbers in an article in today’s Wall Street Journal, which has the following three individuals listed as the source for their information:

William Massey, RIA tax analyst at Thomson Tax & Accounting
George Jones, CCH
James C. Young, Professor at Northern Illinois University

The brackets:

2008 Federal Income Tax Brackets (Married Filing Jointly)

2008 Federal Income Tax Brackets (Most Single Filers)

In addition, the basic standard deduction is supposed to increase to $10,900 (up $200 from 2007) for married filing jointly and for most single filers it will increase to $5,450 (up $100 from 2007). The personal exemption will increase to $3,500, which is a $100 increase over 2007.

A lot of this won’t mean diddly to a lot of filers if congress doesn’t do something with the AMT, which is expected to impact 25 million people in 2008 if something isn’t done. OUCH! Long-time readers know my distaste for the AMT.

For those who are interested, here’s some additional tax posts I have done that you might find helpful:

Tax Stuff You Need to Keep In Your Records

50 of the Most Easily Overlooked Tax Deductions

2007 Federal Income Tax Brackets

401(k) Contribution Limits for 2007

What is Modified Adjusted Gross Income?

Tax Links: Online Tax Resources

How to Calculate Tax-Equivalent Yield

Social Security Wage Base for 2007

38 responses to A Preview of the 2008 Federal Income Tax Brackets

  1. I see a mistake….

    single filer for 35% in 2008 should be a little bit higher ….at least thats what I hope

  2. “AMT… expected to impact 25 million people in 2008 if something isn’t done”

    Heh, heh, heh, welcome to my AMT world…

  3. I’d love to be in the 35% bracket, even if I had to pay all those taxes. *sighs*

  4. Wow… If you made $1,000,000 you’d be giving away $350,000+… That’s crazy

  5. If you made $1,000,000 a lot of it would not likely be salary income, much of it would be capital gains, taxed at a different rate.

  6. @Tim
    True, but you would still be taxed heavily.

    And there are tons of CEO’s with $1,000,000+ salaries.

  7. @Buildandsucceed

    You wouldn’t be paying the full 35% on a $1000000 income. Depending if you are single or married, you would pay 10% on the first bracket, 15% on the next bracket, 25% on the next, and so on. That’s why its called a progressive income tax. As your income progresses, you pay an addition percentage.

  8. Does anyone know: Is the tax bracket you’re in based on what your pre-tax and other deductions income is, or is it based on what you’re in after all the deductions.
    For example, could contributing to my 401(k) put me in a lower tax bracket?

  9. Stephanie,

    Your bracket is based on your taxable income. So, your 401(k) contributions could put you in a lower bracket.

  10. It is time to stop taxing Social Security or at least increase the $32000 limit for married filers and increase it with the cost of living.
    Thank you Bill Clinton for taxing my hard earned retirement payments.

  11. Hi, If you had the choice between taking out $40,000.00 of your inherited cash which is part of a larger IRA to pay off debts (but didnt have to sell stocks to get that $ & your tax bracket is $15% but perhaps less since I am on SSD & earn less than 14,000.00 a year) or take out a 9% re-fi on a 2nd home, which is being rented for $1000.00 a month that will be sold in 3 years with a contract)- is it as simple as comparing interest rates to decide that a 9% re-fi is a better deal than a 15% deal? ( the 9% is non-negotiable as I can only get a “no doc/no asset loan” at that rate unfortunately)or are there other matters to consider. One that I can think of is thats the re-fi includes $5000.00 in closing costs put into the loan & the rule that states that one should not re-fi if you are going to sell within 3 years due to being unable to recoup the closing costs – comes to mind. All reliable info welcome but it has to come asap. Greatly appreciate anyone’s attention to help. Diane

  12. Quote:
    Diane Says:
    January 24th, 2008 at 1:47 pm
    Hi, If you had the choice between taking out $40,000.00 of your inherited cash which is part of a larger IRA to pay off debts (but didnt have to sell stocks to get that $ & your tax bracket is $15% but perhaps less since I am on SSD & earn less than 14,000.00 a year) or take out a 9% re-fi on a 2nd home, which is being rented for $1000.00 a month that will be sold in 3 years with a contract)- is it as simple as comparing interest rates to decide that a 9% re-fi is a better deal than a 15% deal?

    Gee Diane….You’re on tax deferred disability benefits, AND own a second home to consider refinancing? Look no further. I now know one reason why my tax liabilities are so high! Someone has to pay the bills for others that are “poor”!

  13. I am 62. If I take $6,000 out of my 401K will I be charged a 20% withdrawel fee, as well as paying 25% income tax on it? If so, isn’t that double taxation?

  14. Why is the presidential campaign always talking about $250,000 as being the highest bracket that will be affected by Barack tax plan. I don’t see $250k on the list?
    Please help edecuate me before the election.
    Thanks,

  15. mookie if you listen the $250K has been reduced to $120K. AND Obamma said to a crowd yesterday that he thought those that do not want to “share” are selfish. Hope that helps. Ask anyone who is old enough to remember the Carter years what that was like – I predict this will be even worse.

  16. My girlfriend and her two children have lived with me the entire year. She is seperated going through a divorce. Even though she is still considered as being married do I have a right to claim her and her children? She has received no child support.

  17. I’m looking at earning 34,000 for my first full time job. Looking at these brackets, makes me realize why so many people end up marrying. Besides the majority of people who claim love, I have to think there are some people who are enticed by a different incentive. The differences in tax brackets for single and married are HUGE(especially when counted twice for partners). The 32,000-78,000 single bracket is 25% while the 16,000-65,000 married bracket is only 15%. If I’m not mistaken, having two incomes would be easier to live off of than one, so, honestly, why is there such a huge incentive? I know the defense is “well they probably have kids,” but not every married couple has children, and I think(not sure) there are other benefits on top of the married benefit for having dependents. I’m not saying people don’t marry for love, I’m just upset that there is such a large difference. Am I the only one?

  18. Nick,

    If you think that a man gains financially by getting married……..I just don’t know what to say :)

    But you’ve obviously never been married.

  19. Is this total? What i mean is I’m a W2 employee so I pay half my taxes the company i work for pays half. If I decide to go into business for myself I’m responsible for the entire payment. Are these percentages the whole 100% so if I was in the 25% bracket, do I actually pay 12.5% and my employer pays 12.5%?

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