December 06, 1994
Inflation Adjustments Raise 1995 Tax Benefits
WASHINGTON - Taxpayers looking ahead and planning for their
1995 taxes will find larger personal exemptions and standard
deductions, plus wider tax brackets that begin at higher income
levels. These and certain other tax items are indexed each year so
that inflation does not erode benefits or push taxpayers into higher
tax brackets. Personal exemptions for 1995 are raised $50 to $2,500.
The standard deduction for married couples will be $6,550, an
increase of $200 over 1994. For single taxpayers the standard
deduction will be $3,900, an increase of $100. The extra standard
deduction for age and blindness remains at $750 for married
taxpayers and $950 for singles. The minimum standard deduction for
an individual who can be claimed as a dependent on another
taxpayer's return will be $650, a $50 increase over 1994.
For married couples, the 15% tax bracket will extend up to
taxable income of $39,000, a $1,000 increase. The 28% bracket will
extend from taxable income over $39,000 to $94,250, a $2,400
increase. For singles the 15% bracket will rise $600 to $23,350, and
the 28% bracket will go up $1,450 to $56,550.
Indexing will expand the earned income credit for 1995. The
income limit for the maximum credit is increased to $6,160 for a
qualifying individual with one child, $8,640 for a taxpayer with two
or more children and $4,100 for a taxpayer with no children.
The income limits designed to phase out the tax benefits of
personal exemptions and certain itemized deductions for high income
taxpayers will change for 1995. The personal exemption phaseout for
1995 starts for married couples with income above $172,050, up from
$167,700 for 1994 and above $114,700 for singles, up from $111,800
The limitation on itemized deductions will affect taxpayers
with income over $114,700, up from the 1994 level of $111,800.
Editors Note: Revenue Procedure 94-72 contains the 1995
inflation adjustments and will appear in Internal Revenue Bulletin
1994-50, dated Dec. 12, 1994.
Previous | Next
1994 IRS News Releases | News Releases Main | Home