Inflation Adjustments Generally
Raise 1994 Tax Benefits

WASHINGTON - Taxpayers looking ahead and planning for their 1994 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 1994 will be raised $100 to $2,450. The standard deductions for married couples will be $6,350, an increase of $150 over 1993. For single taxpayers the standard deductions will be $3,800, an increase of $100. The extra standard deductions for age and blindness will increase from $700 to $750 for married taxpayers and from $900 to $950 for singles. The minimum standard deductions for an individual who can be claimed as a dependent on another taxpayer's return will remain at $600.

For married couples, the 15% tax bracket will extend up to taxable income of $38,000, a $1,100 increase. The 28% bracket will extend from $38,000 to 91,850, a $2,700 increase. For singles the 15% bracket will rise $650 to $22,750 and the 28% bracket will go up $1,600 to $55,100.

Tax laws designated to phase out the benefits of personal exemptions and limit certain itemized deductions for high income taxpayers will change for 1994. The personal exemption phaseout will start for married couples with income above $167,700 and above $111,800 for singles. For 1993, the phaseout for couples starts at income above $162,700 and above $108,450 for singles.

The limitation on itemized deductions will affect taxpayers with income over $111,800, up from the 1993 income level of $108,450.

The threshold price above which the purchase of a luxury passenger car become subject to an excise tax will rise to $32,000 from $30,000 for 1994.

Because the Omnibus Budget Reconciliation Act of 1993 established new formulas for Earned Income Credit beginning in 1994, these computations will be indexed starting in 1995.

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