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2008 State Income Tax Rates Adjusted for Inflation

Released October 3, 2008

The Franchise Tax Board (FTB) today announced that the 2008 state tax brackets have been adjusted for inflation using a process called “indexing.”

“By indexing the tax rates, a California household with unchanged income will pay 5 percent less in State income taxes,” said State Controller and FTB Chair John Chiang.

The state is adjusting the tax brackets, filing requirement thresholds, the standard deduction, and certain credits based on the inflation rate of 5.0 percent, as measured by the California Consumer Price Index for all urban consumers from June 2007 to June 2008. Last year’s inflation rate measured 3.1 percent.

The standard deduction will increase for single or married filing separate taxpayers from $3,516 to $3,692. For joint, surviving spouse, or head of household taxpayers, the standard deduction increases from $7,032 to $7,384. The personal exemption credit amount for single, separate, and head of household taxpayers will increase from $94 to $99 and for joint or surviving spouse from $188 to $198. The dependent exemption credit increases from $294 to $309 for each dependent. Renter’s credit is available for single filers with adjusted gross income of $34,936 or less and joint filers with adjusted gross income of $69,872 or less.

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. The tax threshold, the amount of income reached where a tax liability is incurred, has risen to an adjusted gross income of $12,226 for single or married filing separate taxpayers, and to $24,452 for joint, surviving spouse, and unmarried head of household filers.

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

View the 2008 California tax rate schedule

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