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2009 State Income Tax Rates Adjusted

Released: August 27, 2009

Sacramento – The Franchise Tax Board (FTB) today released the 2009 state tax brackets. Brackets are “indexed” each year by adjusting them to reflect changes in the California Consumer Price Index (CPI).

Filing requirement thresholds, the standard deduction, and certain credits were adjusted along with income tax brackets based on the deflation rate of -1.5 percent, as measured by the California CPI for all urban consumers from June 2008 to June 2009. Last year’s inflation rate measured 5 percent. This has only occurred one other time since indexing became law in 1978.

The standard deduction will decrease for single or “married filing separate” taxpayers from last year’s rate of $3,692 to $3,637. For joint, surviving spouse, or head of household taxpayers, the standard deduction decreases from $7,384 to $7,274. The personal exemption credit amount for single, separate, and head of household filers will decrease from $99 to $98 and for joint filers or surviving spouses it will decrease from $198 to $196. The Renter’s Credit is available for single filers with adjusted gross incomes of $34,412 or less and joint filers with adjusted gross incomes of $68,824 or less.

A new tax law sets the dependent exemption credit for tax years 2009 and 2010 to the indexed personal exemption credit, lowering the credit to $98. Last year’s credit was $309.

In addition, FTB provides minimum filing requirement thresholds to ensure that most people who will not owe taxes are not required to file a tax return. FTB adjusts these tables each year to include the added senior exemption and the dependent exemption credits. For example, most single people under 65 years old with no dependents would not need to file a state return until they have adjusted gross income of $11,698 or more.

Other tax credits affected by indexing include the Joint Custody Head of Household Credit, Dependent Parent Credit, and Qualified Senior Head of Household Credit.

More information about this and other tax matters is available at ftb.ca.gov.

Editor’s Note: See the attached chart for filing requirement amounts and tax rates.