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State's Income Tax Rates Indexed for 2002

Personal income tax rates have been indexed by 1.5 percent for the 2002 tax year, meaning taxes will go down slightly from last year, according to the Franchise Tax Board (FTB).

Indexing takes the inflation rate into account and adjusts tax brackets, filing requirement thresholds, the standard deduction, and certain credits so Californians do not pay more taxes from year to year because of inflation. The FTB computes the indexed values using the inflation rate as measured by the California Consumer Price Index for all urban consumers from June 2001 to June 2002. Last year's inflation rate measured 5.3 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 $9,958 of adjusted gross income for single taxpayers and $19,865 for married, surviving spouse, and head of household taxpayers.

The standard deduction will increase for single or separate taxpayers from $2,960 to $3,004. For joint, qualifying widow(er), or head of household taxpayers, the standard deduction increases from $5,920 to $6,008. The personal exemption increases for single, separate, or head of household taxpayers from $79 to $80 and for joint or surviving spouses from $158 to $160. The dependent exemption changes from $247 to $251 for each dependent.

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.

See the attached chart for tax rates and filing requirement amounts.