Sneak peak at 2008 tax rates, why look so far ahead anyway?

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The 2007 tax year has come to an end and I hope that you all had a chance to take advantage of whatever tax benefits were available to you. The good thing is that there are still a few things that you can still do until the day that you file. This includes opening an IRA to reduce your AGI or adjustable gross income.

Kiplinger wrote a great article about the effect of inflation on tax rates looking forward into 2008. In general, inflation does suck but looking at it as it relates to how much tax you pay on your income, it can actually benefit you. The personal exemption increases 100 bucks per person which puts another 25 bucks in your pocket if you are in the 25% tax bracket as most of us are. The standard deduction increases 100 bucks per person, another 25 bucks. And finally the tax brackets get shifted. Kiplinger states that on average this means another 130 bucks for the lot of us. Of course, the tax rate may change with the new presidency rolling in with new ideas on government financing.

Here are the forcasted tax brackets:

Singles

2008 TAXABLE INCOME	TAX
$8,026 to $32,550	$803 plus 15% of excess over $8,025
$78,851 to $164,550	$16,056 plus 28% of excess over $78,850
Over $357,700	$103,792 plus 35% of excess over $357,700

Married couples filing jointly

2008 TAXABLE INCOME	TAX
$16,051 to $65,150	$1,605 plus 15% of excess over $16,050
$131,451 to $200,300	$25,545 plus 28% of excess over $131,450
Over $357,700	$96,765 plus 35% of excess over $357,700

Heads of household

2008 TAXABLE INCOME	TAX
$11,451 to $43,650	$1,145 plus 15% of excess over $11,450
$112,651 to $182,400	$23,225 plus 28% of excess over $112,650
Over $357,700	$100,604 plus 35% of excess over $357,700