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Tax Bills Drop for State’s Taxpayers in 2004 Due to Indexing

California taxpayers will pay less in income taxes next year due to the state’s 2004 indexed tax rates, announced the Franchise Tax Board (FTB).

“We’re adjusting the tax rates for inflation so that families will pay less in state income taxes next year and keep more money in their pockets,” said State Controller and FTB Chair Steve Westly.

The tax rates have been indexed by 3.1 percent for the 2004 tax year, which means that the average family will pay less in state income taxes if their income was unchanged from last year. Indexing takes the inflation rate into account and adjusts tax brackets, filing requirement thresholds, the standard deduction, and certain credits. The FTB computes the indexed values using the inflation rate as measured by the California Consumer Price Index for all urban consumers from July 1, 2003 to June 30, 2004. Last year’s inflation rate measured 2.2 percent.

The FTB designs the minimum filing requirement thresholds to ensure that most people who will not owe taxes are not required to file a tax return. The FTB adjusts these tables each year to include the added senior exemption and the dependent exemption credits. The tax threshold, the amount of income reached where a tax liability is incurred, has risen to $10,492 of adjusted gross income for single and married filing separate taxpayers and $20,931 for married, surviving spouse, and head of household taxpayers.

The standard deduction will increase for single or married filing separate taxpayers from $3,070 to $3,165. For married, qualifying widow(er), or head of household taxpayers, the standard deduction increases from $6,140 to $6,330. The personal exemption credit increases for single, married filing separate, or head of household taxpayers from $82 to $85 and for married or surviving spouses from $164 to $170. The dependent exemption credit changes from $257 to $265 for each dependent.

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

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

2004 California Tax Rate Schedules

Schedule X
Single or Married Filing Separate Taxpayers
If the taxable income is
Computed tax is
over
but not over
of amount over

$0
$6,147
$14,571
$22,997
$31,925
$40,346

$6,147
$14,571
$22,997
$31,925
$40,346
AND OVER

$0.00
$61.47
$229.95
$566.99
$1,102.67
$1,776.35
plus
plus
plus
plus
plus
plus
1.0%
2.0%
4.0%
6.0%
8.0%
9.3%

$0
$6,147
$14,571
$22,997
$31,925
$40,346

Schedule Y
Married Filing Joint or Qualifying Widow(er) Taxpayers
If the taxable income is
Computed tax is
over
but not over
of amount over
$0
$12,294
$29,142
$45,994
$63,850
$80,692

$12,294
$29,142
$45,994
$63,850
$80,692
AND OVER

$0.00
$122.94
$459.90
$1,133.98
$2,205.34
$3,552.70
plus
plus
plus
plus
plus
plus
1.0%
2.0%
4.0%
6.0%
8.0%
9.3%

$0
$12,294
$29,142
$45,994
$63,850
$80,692

Schedule Z
Head of Household Taxpayers
If the taxable income is
Computed tax is
over
but not over
of amount over
$0
$12,300
$29,143
$37,567
$46,494
$54,918

$12,300
$29,143
$37,567
$46,494
$54,918
AND OVER

$0.00
$123.00
$459.86
$796.82
$1,332.44
$2,006.36
plus
plus
plus
plus
plus
plus
1.0%
2.0%
4.0%
6.0%
8.0%
9.3%

$0
$12,300
$29,143
$37,567
$46,494
$54,918

2004 Filing Requirement Amounts

Gross income more than:
Single or head of household Age on 12/31/04 No dependents 1 dependent 2 dependents
Under 65 12,729 21,562 28,187
65 or older 16,979 23,604 28,904
Married Age on 12/31/04 No dependents 1 dependent 2 dependents
Under 65 (both spouses) 25,457 34,290 40,915
65 or older (one spouse) 29,707 36,332 41,632
65 or older (both spouses) 33,957 40,582 45,882
Qualifying widow(er) Age on 12/31/04 No dependents 1 dependent 2 dependents
Under 65 N/A 21,562 28,187
65 or older N/A 23,604 28,904
Adjusted gross income more than:
Single or head of household Age on 12/31/04 No dependents 1 dependent 2 dependents
Under 65 10,183 19,016 25,641
65 or older 14,433 21,058 26,358
Married Age on 12/31/04 No dependents 1 dependent 2 dependents
Under 65 (both spouses) 20,365 29,198 35,823
65 or older (one spouse) 24,615 31,240 36,540
65 or older (both spouses) 28,865 35,490 40,790
Qualifying widow(er) Age on 12/31/04 No dependents 1 dependent 2 dependents
Under 65 N/A 19,016 25,641
65 or older N/A 21,058 26,358