Individual Income Tax Rates: 1989 through 2007

Individual Income Tax Rates: 1989 through 2007

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—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱ
ŘŖŖŝȱ
›Ž??ȱǯȱœŽ— Ž’—ȱ
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Œ?˜‹Ž›ȱŚǰȱŘŖŖŜȱ
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŝȬśŝŖŖȱ
   ǯŒ›œǯ?˜Ÿȱ
řŖŖŖŝȱ
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Pr
epared for Members and Committees of Congress

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
ž––Š›¢ȱ
Over the past several years there have been five major changes in federal individual marginal
income tax rates. The Tax Reform Act of 1986, the Omnibus Budget Reconciliation Act of 1990,
the Omnibus Budget Reconciliation Act of 1993, the Economic Growth and Tax Relief
Reconciliation Act of 2001, the Jobs and Growth Tax Relief Reconciliation Act of 2003, and the
Working Families Tax Relief Act of 2004 all changed the marginal income tax rate structure. The
marginal income tax rate structure for 2006 consists of six statutory marginal rates: 10%, 15%,
25%, 28%, 33%, and 35%.
Although these acts changed the tax rate structure, they maintained, in a slightly modified form,
the policy of tax indexation introduced in 1981. Under current law, the personal exemptions,
standard deductions, earned income tax credit, the personal exemption phaseout threshold, the
itemized deduction limitation threshold, the tax rate brackets, and other components of the tax
structure are indexed for inflation. Tax indexation helps prevent inflation from producing
automatic tax increases and unintended changes in the distribution of the tax burden.
This report is updated annually to reflect the most recent indexation adjustments.

˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
˜—?Ž—?œȱ
Tax Reform Act of 1986 .................................................................................................................. 1
Omnibus Budget Reconciliation Act of 1990.................................................................................. 2
Omnibus Budget Reconciliation Act of 1993.................................................................................. 3
Economic Growth and Tax Relief Reconciliation Act of 2001 ....................................................... 4
Jobs and Growth Tax Relief Reconciliation Act of 2003 ................................................................ 5
The Working Families Tax Relief Act of 2004................................................................................ 5
Effects of Inflation on Real Income Tax Liabilities ........................................................................ 5
The Mechanics of Indexation .......................................................................................................... 6
Tax Rate Schedules for 1989 Through 2007 ................................................................................... 7

Š‹•Žœȱ
Table 1. Tax Rates, Personal Exemptions, and Standard Deductions, 1989.................................... 7
Table 2. Tax Rates, Personal Exemptions, and Standard Deductions, 1990.................................... 8
Table 3. Tax Rates, Personal Exemptions, and Standard Deductions, 1991.................................... 9
Table 4. Tax Rates, Personal Exemptions, and Standard Deductions, 1992.................................... 9
Table 5. Tax Rates, Personal Exemptions, and Standard Deductions, 1993.................................. 10
Table 6. Tax Rates, Personal Exemptions, and Standard Deductions, 1994...................................11
Table 7. Tax Rates, Personal Exemptions, and Standard Deductions, 1995.................................. 12
Table 8. Tax Rates, Personal Exemptions, and Standard Deductions, 1996.................................. 12
Table 9. Tax Rates, Personal Exemptions, and Standard Deductions, 1997.................................. 13
Table 10. Tax Rates, Personal Exemptions, and Standard Deductions, 1998................................ 14
Table 11. Tax Rates, Personal Exemptions, and Standard Deductions, 1999................................ 15
Table 12. Tax Rates, Personal Exemptions, and Standard Deductions, 2000................................ 16
Table 13. Tax Rates, Personal Exemptions, and Standard Deductions, 2001................................ 17
Table 14. Personal Exemptions and Standard Deductions, 2002 .................................................. 17
Table 15. Marginal Income Tax Rates, 2002 ................................................................................. 18
Table 16. Marginal Income Tax Rates, 2003 Under Prior Law ..................................................... 18
Table 17. Personal Exemptions and Standard Deductions, Limitation on Itemized
Deductions, and the Personal Exemption Phaseout, 2003 ......................................................... 19
Table 18. Marginal Income Tax Rates, 2003 ................................................................................. 20
Table 19. Personal Exemptions and Standard Deductions, Limitation on Itemized
Deductions, and the Personal Exemption Phaseout, 2004 ......................................................... 20
Table 20. Marginal Income Tax Rates, 2004 ................................................................................. 21
Table 21. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions
and the Personal Exemption Phase Out Thresholds, 2005 ......................................................... 21
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
Table 22. Marginal Income Tax Rates, 2005 ................................................................................. 22
Table 23. 2005 EITC Indexed Levels............................................................................................ 22
Table 24. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions
and the Personal Exemption Phase Out Thresholds, 2006 ......................................................... 23
Table 25. Marginal Income Tax Rates, 2006 ................................................................................. 23
Table 26. 2006 EITC Indexed Levels............................................................................................ 24
Table 27. Personal Exemptions, Standard Deductions, Limitation on Itemized Deductions
and the Personal Exemption Phase Out Thresholds, 2007 ......................................................... 24
Table 28. Marginal Income Tax Rates, 2007 ................................................................................. 25

˜—?ŠŒ?œȱ
Author Contact Information .......................................................................................................... 26

˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
ver the past several years, there have been five major changes in federal individual
marginal income tax rates. The Tax Reform Act of 1986 (TRA86) created an individual
O marginal income tax rate structure that consisted of two statutory tax rates, 15% and 28%.
However, TRA86 also legislated a 5% surcharge on the taxable income of certain upper-income
households, which effectively created a third marginal tax rate of 33%.
The Omnibus Budget Reconciliation Act of 1990 (OBRA90) eliminated the 5-percent surcharge
and created a marginal tax rate structure consisting of three statutory marginal tax rates of 15%,
28%, and 31%. However, OBRA90 also contained a provision that limited the amount of
itemized deductions that upper-income households could claim and a provision that modified the
phaseout of the tax benefits of personal exemptions for upper-income households.
The Omnibus Budget Reconciliation Act of 1993 (OBRA93) added two new marginal income tax
rates, 36% and 39.6%, at the upper end of the income scale. It also delayed indexation of the two
new tax brackets for one year. In addition, OBRA93 made permanent the limitation on itemized
deductions and the phaseout of the tax benefits of the personal exemption.
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA 2001) created a new
10% marginal income tax bracket. It also reduced the top four marginal tax rates to 25%, 28%,
33%, and 35% with the changes phased-in over the period 2001 through 2006.
The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA 2003) accelerated, to
2003, the phase-in of the tax rate reductions originally enacted in EGTRRA 2001.
The Working Families Tax Relief Act of 2004 extended through 2010 most of the tax changes
enacted as part of the 2003 Act.
The following sections of this report describe the changes in the marginal tax rate structure over
the past several years. In addition, the reasons for tax indexation and the mechanics of tax
indexation are briefly explained. The final section contains the tax rate schedules, exemption
amounts, and standard deductions for joint, single, and head of household returns for tax years
1989 through 2007.1
Š¡ȱŽ?˜›–ȱŒ?ȱ˜?ȱŗşŞŜȱ
Prior to 1986 there were approximately 14 marginal income tax rates ranging from 11% to 50%.
For tax years after 1987, the Tax Reform Act reduced the marginal tax rate structure to two
statutory tax rates of 15% and 28%.
Although the Tax Reform Act specified that there were only two statutory individual marginal
income tax rates, it also adopted a 5% surcharge on the taxable income of certain upper-income
households. This surcharge effectively created a third marginal tax rate of 33% (28% statutory
marginal tax rate plus 5% surcharge) and produced an anomaly in the tax code that came to be
known as the tax rate “bubble.”

1 This report concentrates on statutory marginal income tax rates, which are the rates of tax applicable on an increment
of taxable income. Average tax rates, on the other hand, are tax liability expressed as a percentage of income.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
Because the surcharge was phased out as incomes increased, marginal tax rates rose to 33% but
then fell back to 28%. Hence, the tax rate “bubble.” The surcharge was adopted so that the 1986
Act would not change the distribution of the income tax burden relative to its distribution under
pre-1986 tax law, would meet the needed revenue targets, and yet allow the 1986 Act to be
characterized as having only two statutory marginal tax rates.
The surcharge was designed to phase out the tax benefits of the 15% tax bracket and the tax
benefits of the personal exemptions for upper-income households. For joint returns in 1990, the
phaseout of the tax benefits of the 15% tax bracket started when taxable income exceeded
$78,400 and ended when taxable income reached $162,770. For single returns, the phaseout of
the 15% tax bracket occurred over the taxable income range of $47,050 to $97,620. For heads of
households, the phaseout occurred over the taxable income range of $67,200 to $134,930.
To demonstrate how the 5% surcharge worked to “phase out” the tax benefits of the 15% tax
bracket consider the following example based on joint returns for 1990. The difference between
taxing the first $32,450 of taxable income at 28% instead of 15% was $4,218.50. Five percent of
the difference between the upper and lower phaseout limits was also $4,218.50 ($162,770 less
$78,400 multiplied by 5%). Hence, assessing the 5% surcharge on taxable income between
$78,400 and $162,770 was equivalent to having taxed the first $32,450 of taxable income at 28
rather than 15%. The 5% surcharge produced identical results for both single and head of
household returns. This surcharge effectively raised the marginal tax rate on taxable income
within these ranges from 28% to 33% (28% statutory marginal tax rate plus 5% surcharge).
A 5% surcharge was also used to phase out the tax benefits of the personal exemption for upper-
income households. In 1990, each personal exemption was worth $2,050 and produced a tax
savings for a household in the 28% marginal tax rate bracket of $574 ($2,050 times 28%). To
recapture this tax savings a 5% surcharge was assessed against $11,480 of taxable income for
each personal exemption claimed. A 5% surcharge against this amount of taxable income
increased tax liability by $574 ($11,480 times 5%), which exactly offset the tax savings from the
personal exemption.
The phaseout of personal exemptions started immediately after the phaseout of the 15% tax
bracket and the phaseout of each exemption occurred sequentially. This meant that the taxable
income range over which the 5% surcharge applied depended on the number of personal
exemptions claimed on the tax return. For example, on a joint return claiming two personal
exemptions the 5% surcharge would apply to taxable income between $162,770 and $185,730
($162,770 plus two times $11,480). On a joint return with four personal exemptions, the 5%
surcharge would apply to taxable income between $162,770 and $208,690 ($162,770 plus four
times $11,480).
As was also the case with the phaseout of the tax benefits from the 15% tax bracket, the phaseout
of the personal exemption effectively raised the statutory marginal tax rate from 28% to 33%
(28% regular tax rate plus 5% surcharge). As noted, the income range over which the effective
marginal tax rate was 33% depended on the number of personal exemptions claimed.
–—’‹žœȱž??Ž?ȱŽŒ˜—Œ’•’Š?’˜—ȱŒ?ȱ˜?ȱŗşşŖȱ
The Omnibus Budget Reconciliation Act of 1990 (OBRA90) created a three-tiered statutory
marginal income tax rate structure with rates of 15%, 28%, and 31%, effective in tax years
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
Řȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
beginning in 1991. (The tax rate structure for 1991 is shown in Table 5.) OBRA90 also
eliminated the tax bubble by repealing the 5% surcharge that was instituted under the Tax Reform
Act of 1986 (TRA86). Although the 5% surcharge was repealed, it was replaced with a limitation
on itemized deductions and a new approach to phasing out the tax benefits of the personal
exemption for upper-income households.
OBRA90 also reintroduced a tax-rate differential on capital gains income. Provisions in the 1986
Act had eliminated the preferential tax treatment of capital gains income and hence, capital gains
income was treated as ordinary income and taxed at regular rates of up to 33%. OBRA90
contained a provision which limited the tax on capital gains income to a maximum of 28%. This
provision was effective starting in tax year 1991.
The OBRA90 limitation on itemized deductions worked as follows. For tax years starting in
1991, otherwise allowable deductions were reduced by 3% of the amount by which a taxpayer’s
adjusted gross income (AGI) exceeded $100,000 (except in the case of married couples filing
separate returns where the AGI limit was $50,000). For example, in 1991, if a taxpayer’s AGI
were $110,000, then his otherwise allowable itemized deductions would be reduced by $300
($110,000 less $100,000 times 3%). This provision effectively raised the marginal income tax rate
of those taxpayers affected by approximately 1 percentage point. (A dollar of income in excess of
$100,000 was taxed as if it were $1.03, since in addition to the extra dollar of income, the
taxpayer lost .03 of itemized deductions.)
Allowable deductions for medical expenses, casualty and theft losses, and investment interest
were not subject to this limitation. For tax years after 1991, the $100,000 threshold was indexed
for inflation. This provision was originally scheduled to expire after tax year 1995.
The phaseout of the tax benefits of the personal exemption worked as follows. Each personal
exemption was phased out by a factor of 2% for each $2,500 (or fraction of $2,500) by which a
taxpayer’s AGI exceeded a given threshold amount. In 1991, the threshold amount for a joint
return was $150,000; for a single return the threshold was $100,000; and for heads of households
the threshold was $125,000.
For example, in 1991, a joint household whose AGI was $183,000 would lose 28% of their total
personal exemptions claimed. The AGI amount in excess of the threshold in this instance would
be $33,000, $183,000 AGI less $150,000 threshold limit. The $33,000 excess divided by $2,500
would produce a factor of 13.2 which when rounded up would equal 14. This figure is multiplied
by 2% to arrive at the final disallowance amount of 28%. Hence, if the family had claimed two
personal exemptions, which at $2,150 each would total $4,300, they would only be allowed to
deduct $3,096 ($4,300 total personal exemptions less the $1,204 disallowance, which is 28% of
the total).
For tax years after 1991, these threshold amounts were indexed for inflation. This provision was
also scheduled to expire after tax year 1995.
–—’‹žœȱž??Ž?ȱŽŒ˜—Œ’•’Š?’˜—ȱŒ?ȱ˜?ȱŗşşřȱ
The Omnibus Budget Reconciliation Act of 1993 (OBRA93) made several changes in the
individual marginal income tax rate structure. First, it added two new marginal tax rates, 36 and
39.6%, at the upper-end of the income spectrum. (The 39.6% marginal tax rate bracket was
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
řȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
created by imposing a “10% surtax” on high-income taxpayers.) Although OBRA93 was enacted
in August of 1993, the increase in the top marginal tax rates was made effective retroactively to
January 1, 1993. (Affected taxpayers, however, were not assessed penalties for underpayment of
1993 taxes resulting from the tax rate increase and they were also allowed to pay any additional
1993 taxes in three equal installments over a two-year period.)
Second, OBRA93 delayed indexation of the new top marginal income tax brackets for one year.
Hence, the nominal dollar tax brackets for the 36% and 39.6% marginal tax rates will remain at
the same level for both tax year 1993 and 1994.
Finally, OBRA93 made permanent both the itemized deduction limitation and the phaseout of the
tax benefits from the personal exemption.
Œ˜—˜–’Œȱ ›˜ ?‘ȱŠ—?ȱŠ¡ȱŽ•’Ž?ȱŽŒ˜—Œ’•’Š?’˜—ȱŒ?ȱ
˜?ȱŘŖŖŗȱ
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) made three major
changes to the individual income tax rate structure. First, it created a new 10% marginal income
tax bracket for a portion of taxable income that had been taxed at the 15% marginal tax rate. The
new 10% marginal income tax rate bracket applied, beginning in tax year 2002, to the first
$12,000 of taxable income for married couples filing jointly, the first $10,000 of taxable income
for heads of households, and the first $6,000 of taxable income for single individuals. In 2008, the
$6,000 amount for single individuals was scheduled to be $7,000 and the $12,000 amount for
married taxpayers filing joint returns was scheduled to be $14,000. Starting with tax year 2009,
these marginal tax rate bracket amounts are scheduled to be indexed for inflation.
Second, the 2001 Act reduced the top four marginal income tax rates over the 2001 through 2006
time period. Under prior income tax law, the marginal tax rate structure for individuals consisted
of five rates: 15%, 28%, 31%, 36% and 39.6%. The 2001 Act reduced the top four marginal
income tax rates over a six-year period to 25%, 28%, 33% and 35% respectively.
Finally, the act increased the width of the 15% tax bracket for married couples filing joint returns
to twice the width of the 15% tax bracket for single returns. This provision was scheduled to be
phased-in over a four-year time period starting in 2005. The end point of the 15% tax bracket for
joint returns was scheduled to be 180% of the end point of the 15% tax bracket for single returns
in 2005, 187% in 2006, 193% in 2007, and 200% in 2008 and subsequent years.2
In addition to these changes that directly affected the tax rate structure, the 2001 Act made several
other changes of note. It increased the standard deduction for joint returns to twice the size of the
standard deduction for single returns, with the change scheduled to be phased in over a five year
period, 2005 to 2009. EGTRRA also repealed the limitation on itemized deductions and personal
exemptions for high-income taxpayers with the repeal scheduled to be phased in between 2006
and 2010.

2 For more information on these changes see CRS Report RS20976, Individual Income Tax Rates Under the Economic
Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-16), by Gregg A. Esenwein.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
Śȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
˜‹œȱŠ—?ȱ ›˜ ?‘ȱŠ¡ȱŽ•’Ž?ȱŽŒ˜—Œ’•’Š?’˜—ȱŒ?ȱ˜?ȱ
ŘŖŖřȱ
The Jobs and Growth Tax Relief Reconciliation Act (JGTRRA) made several changes to the
individual income tax rate structure. First, it accelerated to 2003 the tax rate reductions, originally
enacted as part of EGTRRA, that were scheduled to occur between 2004 and 2006. Second, it
accelerated the scheduled expansion in the 10% tax bracket for single and joint returns to tax
years 2003 and 2004. In 2005, the 10% bracket reverts to the levels as scheduled under
EGTRRA.
Third, it accelerates the scheduled widening of the 15% tax bracket for joint returns to twice the
width of the 15% tax bracket for single returns. This change would be effective for tax years 2003
and 2004. In 2005, the 15% bracket for joint returns would revert to its levels as scheduled under
EGTRRA.
Fourth, JGTRRA accelerated the scheduled increase in the standard deduction for joint returns.
For tax years 2003 and 2004, the standard deduction for joint returns will be twice the size of the
standard deduction for single returns. In 2005, the standard deduction for joint returns reverts to
the levels as scheduled under EGTRRA.
‘Žȱ˜›”’—?ȱŠ–’•’ŽœȱŠ¡ȱŽ•’Ž?ȱŒ?ȱ˜?ȱŘŖŖŚȱ
In September 2004, Congress passed the Working Families Tax Relief Act of 2004 (WFTRA).
WFTRA extended several tax provisions that were scheduled to expire at the end of 2004. These
expiring tax reductions were enacted under JGTRRA, which had accelerated implementation of
tax reductions originally enacted in 2001 under EGTRRA.
Among other things, WFTRA extended marriage penalty relief (standard deduction and 15% tax
bracket for joint returns set at twice the level as those for single returns) through 2008. (In 2009
and 2010, EGTRRA provisions apply, maintaining the level of the standard deduction and 15%
tax bracket for joint returns). The 2004 Act also extended the increase in the 10% income tax
bracket through 2010.
??ŽŒ?œȱ˜?ȱ —?•Š?’˜—ȱ˜—ȱŽŠ•ȱ —Œ˜–ŽȱŠ¡ȱ’Š‹’•’?’Žœȱ
In the United States, the federal individual income tax is progressive. That is, as incomes
increase, income tax liabilities, when measured as a percentage of income, also increase. Part of
this progressivity is achieved through marginal tax rates that increase as taxable income increases.
In addition, the income tax is structured on the basis of nominal dollar amounts. Some examples
of nominal dollar amounts in the income tax are the personal exemption, the standard deduction,
and the earned income tax credit. During periods of inflation, under an unindexed tax system, the
progressive nature of the marginal tax rates combined with nominal dollar amounts produces
automatic tax increases and unintentional changes in the distribution of the tax burden.
The effects of inflation on real income tax liabilities can be illustrated in the following manner.
Consider the case of a four-person family with a $30,000 income who filed a joint return in 1989.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
śȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
If we assume that the family did not itemize its deductions, but rather used the standard
deduction, then its taxable income would have been $16,800 ($30,000 less standard deduction of
$5,200 and four personal exemptions at $2,000 apiece). Income tax liability on taxable income of
$16,800 would have been $2,520 which translates into an average tax rate of 8.4% ($2,520
income tax liability divided by $30,000 income). (See Table 1 for 1989 tax rates.)
Now consider what would happen if inflation averaged 5% in 1990. In order to maintain the same
real gross income that it had in 1989, the family would have to earn $31,500 in 1990. In other
words, income would have to rise by $1,500 for the family to maintain the same real purchasing
power that it had in the previous year. Assuming there is no indexation, the family’s taxable
income would be $18,300 ($31,500 less the standard deduction of $5,200 and four personal
exemptions at $2,000 apiece). Income tax owed on a taxable income of $18,300 would be $2,745
which translates into an average tax rate of 8.7%. As can be seen from this example, under an
unindexed tax system, inflation increased this family’s real income tax burden by 0.3 of a
percentage point between 1989 and 1990.
If the tax system had been indexed for the assumed 5% inflation, the family would have
experienced no increase in their real tax burden. For instance, under an indexed system the value
of the standard deduction for a joint return would have increased from $5,200 in 1989 to $5,460
in 1990. The personal exemption would have increased from $2,000 to $2,100. Under these
circumstances the family’s 1990 taxable income would have been $17,640 ($31,500 income less
standard deduction and personal exemptions). Based on this taxable income, their income tax
liability would have been $2,646 which translates into an average tax rate of 8.4%. Thus, under
an indexed tax system, the family would have experienced no change in their real income tax
liability between 1989 and 1990.
‘ŽȱŽŒ‘Š—’Œœȱ˜?ȱ —?Ž¡Š?’˜—ȱ
Provisions originally contained in the Economic Recovery Tax Act of 1981 and later amended by
the Tax Reform Act of 1986, the Omnibus Budget Reconciliation Act of 1990, and the Omnibus
Budget Reconciliation Act of 1993, specify that certain components of the individual income tax
system will be indexed for inflation. These components include the standard deductions, the
additional standard deductions for the elderly and the blind, the personal exemption, the earned
income tax credit (EITC), the income breakpoints between the various tax rate brackets, the
income level at which the limitation on itemized deductions becomes effective, and the income
level above which the tax benefits of the personal exemptions are phased out.
The adjustment for any given tax year is to be based on the percentage amount by which the
average Consumer Price Index for all urban consumers (CPI-U) for the twelve month period
ending on August 31 of the preceding year exceeds the average CPI-U during a specified twelve
month base period. The base period varies depending upon the tax component under
consideration.
With the exception of the EITC, inflation adjustments are rounded down to the nearest multiple of
$50. Although rounding down affects the accuracy of any given year’s inflation adjustment, the
effect will not be cumulative since each year’s adjustment will be calculated to reflect the entire
amount of inflation that has occurred between the adjustment year and the base period.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
Ŝȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
For example, the adjustment factor for the standard deductions in 2002 was calculated as follows.
The average CPI-U for the base period, September 1986 through August 1987, was 111.98. The
average CPI-U for the period September 2000 through August 2001 was 175.875. Given these
amounts, the inflation adjustment factor for 2002 was 1.5705 (175.875/111.98). This inflation
adjustment factor was then applied to the base year values of the standard deductions to
determine their values for 2002.
For instance, the standard deduction for joint returns in the base year was $5,000. Multiplying this
amount by the inflation adjustment factor produces a 2002 value of $7,852. Rounding down to
the nearest $50 multiple results in a 2002 standard deduction for joint returns of $7,850. This
same process was applied to all of the other indexed components of the tax code to determine
their values in terms of 2002 dollars.
Š¡ȱŠ?ŽȱŒ‘Ž?ž•Žœȱ?˜›ȱŗşŞşȱ‘›˜ž?‘ȱŘŖŖŝȱ
The following tables present the marginal tax rates schedules, personal exemption amounts, and
standard deductions for tax years 1989 through 2007.
Table 1. Tax Rates, Personal Exemptions, and Standard Deductions, 1989
Personal Exemptions
$2,000
Standard Deductions
Joint
$5,200
Single
3,100
Head of Household
4,550
Additional Standard Deductions for the Elderly and the Blind
Joint
$600
Single/Head of Household
750
Marginal Income Tax Rates, Joint Returns
If taxable income is:
Then, tax is:
$ 0 - $ 30,950
15% of the amount over $ 0
$ 30,950 - $ 74,850
$4,642.50 + 28% of the amount over $ 30,950
$ 74,850 - $177,720
$16,934.50 + 33% of the amount over $ 74,850
$177,720 +
$50,881.60 + 28% of the amount over $177,720
Marginal Income Tax Rates, Single Returns
If taxable income is:
Then, tax is:
$ 0 - $ 18,550
15% of the amount over $ 0
$ 18,550 - $ 44,900
$ 2,782.50 + 28% of the amount over $ 18,550
$ 44,900 - $104,300
$10,160.50 + 33% of the amount over $ 44,900
$104,300 +
$29,772.40 + 28% of the amount over $104,300
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŝȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
Marginal Income Tax Rates, Heads of Household
If taxable income is:
Then, tax is:
$ 0 - $ 24,850
15% of the amount over $ 0
$ 24,850 - $ 64,200
$ 3,727.50 + 28% of the amount over $ 24,850
$151,210 +
$43,458.80 + 28% of the amount over $151,210
$ 64,200 - $151,210
$14,745.50 + 33% of the amount over $ 64,200
Note: “Tax bubble” indicated by italicized areas of the tax rate schedules.
Table 2. Tax Rates, Personal Exemptions, and Standard Deductions, 1990
Personal Exemptions
$2,050
Standard Deductions
Joint
$5,450
Single
3,250
Head of Household
4,750
Additional Standard Deductions for the Elderly and the Blind
Joint
$650
Single/Head of Household
800
Marginal Income Tax Rates, Joint Returns
If taxable income is:
Then, tax is:
$ 0 - $ 32,450
15% of the amount over $ 0
$ 32,450 - $ 78,400
$ 4,867.50 + 28% of the amount over $ 32,450
$ 78,400 - $185,730
$17,733.50 + 33% of the amount over $ 78,400
$185,730 +
$53,152.40 + 28% of the amount over $185,730
Marginal Income Tax Rates, Single Returns
If taxable income is:
Then, tax is:
$ 0 - $ 19,450
15% of the amount over $ 0
$ 19,450 - $ 47,050
$ 2,917.50 + 28% of the amount over $ 19,450
$ 47,050 - $109,100
$10,645.50 + 33% of the amount over $ 47,050
$109,100 +
$31,122.00 + 28% of the amount over $109,100
Marginal Income Tax Rates, Heads of Households
If taxable income is:
Then, tax is:
$ 0 - $ 26,050
15% of the amount over $ 0
$ 26,050 - 67,200
$ 3,907.50 + 28% of the amount over $ 26,050
$ 67,200 - $157,890
$15,429.50 + 33% of the amount over $ 67,200
$157,890 +
$45,357.20 + 28% of the amount over $157,890
Note: “Tax Bubble” indicated by italicized areas of the tax rate schedules.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
Şȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
Table 3. Tax Rates, Personal Exemptions, and Standard Deductions, 1991
Personal Exemptions
$2,150
Standard Deductions
Joint
$5,700
Single
3,400
Head of Household
5,000
Additional Standard Deductions for the Elderly and the Blind
Joint
$650
Single/Head of Household
850
Marginal Income Tax Rates, Joint Returns
If taxable income is:
Then, tax is:
$ 0 - $ 34,000
15% of the amount over $ 0
$ 34,000 - $ 82,150
$ 5,100 + 28% of the amount over $ 34,000
$ 82,150 +
$18,582 + 31% of the amount over $ 82,150
Marginal Income Tax Rates, Single Returns
If taxable income is:
Then, tax is:
$ 0 - $ 20,350
15% of the amount over $ 0
$ 20,350 - $ 49,300
$ 3,052.50 + 28% of the amount over $ 20,350
$ 49,300 +
$11,158.50 + 31% of the amount over $ 49,300
Marginal Income Tax Rates, Heads of Households
If taxable income is:
Then, tax is:
$ 0 - $ 27,300
15% of the amount over $ 0
$ 27,300 - $ 70,450
$ 4,095 + 28% of the amount over $ 27,300
$ 70,450 +
$16,177 + 31% of the amount over $ 70,450
Table 4. Tax Rates, Personal Exemptions, and Standard Deductions, 1992
Personal Exemptions
$2,300
Standard Deductions
Joint
$6,000
Single
3,600
Head of Household
5,250
Additional Standard Deductions for the Elderly and the Blind
Joint
$700
Single/Head of Household
900
Marginal Income Tax Rates, Joint Returns
If taxable income is:
Then, tax is:
$ 0 - $ 35,800
15% of the amount over $ 0
$ 35,800 - $ 86,500
$ 5,370 + 28% of the amount over $ 35,800
$ 86,500 +
$19,566 + 31% of the amount over $ 86,500
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
şȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
Marginal Income Tax Rates, Single Returns
If taxable income is:
Then, tax is:
$ 0 - $ 21,450
15% of the amount over $ 0
$ 21,450 - $ 51,900
$ 3,218 + 28% of the amount over $ 21,450
$ 51,900 +
$11,744 + 31% of the amount over $ 51,900
Marginal Income Tax Rates, Heads of Households
If taxable income is:
Then, tax is:
$ 0 - $ 28,750
15% of the amount over $ 0
$ 28,750 - $ 74,150
$ 4,313 + 28% of the amount over $ 28,750
$ 74,150 +
$17,235 + 31% of the amount over $ 74,150
Table 5. Tax Rates, Personal Exemptions, and Standard Deductions, 1993
Personal Exemptions
$2,350
Standard Deductions
Joint
$6,200
Single
3,700
Head of Household
5,450
Additional Standard Deductions for the Elderly and the Blind
Joint
$700
Single/Head of Household
900
Marginal Income Tax Rates, Joint Returns
If taxable income is:
Then, tax is:
$ 0 - $ 36,900
15% of the amount over $ 0
$ 36,900 - $ 89,150
$5,535 + 28% of the amount over $36,900
$ 89,150 - $ 140,000
$20,165 + 31% of the amount over $89,150
$ 140,000 - $ 250,000
$35,929 + 36% of the amount over $140,000
$ 250,000 +
$75,529 + 39.6% of the amount over $250,000
Marginal Income Tax Rates, Single Returns
If taxable income is:
Then, tax is:
$ 0 - $ 22,100
15% of the amount over $ 0
$ 22,100 - $53,500
$3,315 + 28% of the amount over $22,100
$ 53,500 - $ 115,000
$12,107 + 31% of the amount over $53,500
$ 115,000 - $ 250,000
$31,172 + 36% of the amount over $115,000
$ 250,000 +
$79,772 + 39.6% of the amount over $250,000
Marginal Income Tax Rates, Heads of Households
If taxable income is:
Then, tax is:
$ 0 - $ 29,600
15% of the amount over $ 0
$ 29,600 - $ 76,400
$4,440 + 28% of the amount over $29,600
$ 76,400 - $ 127,500
$17,544 + 31% of the amount over $76,400
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗŖȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
$ 127,500 - $ 250,000
$33,385 + 36% of the amount over $127,500
$ 250,000 +
$77,485 + 39.6% of the amount over $250,000
Table 6. Tax Rates, Personal Exemptions, and Standard Deductions, 1994
Personal Exemptions
$2,450
Standard Deductions
Joint
$6,350
Single
3,800
Head of Household
5,600
Additional Standard Deductions for the Elderly and the Blind
Joint
$750
Single/Head of Household
950
Marginal Income Tax Rates, Joint Returns
If taxable income is:
Then, tax is:
$ 0 - $ 38,000
15% of the amount over $ 0
$ 38,000 - $ 91,850
$5,700 + 28% of the amount over $38,000
$ 91,850 - $ 140,000
$20,778 + 31% of the amount over $91,850
$ 140,000 - $ 250,000
$35,705 + 36% of the amount over $140,000
$ 250,000 +
$75,305 + 39.6% of the amount over $250,000
Marginal Income Tax Rates, Single Returns
If taxable income is:
Then, tax is:
$ 0 - $ 22,750
15% of the amount over $ 0
$ 22,750 - $ 55,100
$3,413 + 28% of the amount over $22,750
$ 55,100 - $ 115,000
$12,471 + 31% of the amount over $55,100
$ 115,000 - $ 250,000
$31,040 + 36% of the amount over $115,000
$ 250,000 +
$79,640 + 39.6% of the amount over $250,000
Marginal Income Tax Rates, Heads of Households
If taxable income is:
Then, tax is:
$ 0 - $ 30,500
15% of the amount over $ 0
$ 30,500 - $ 78,700
$4,575 + 28% of the amount over $30,500
$ 78,700 - $ 127,500
$18,071 + 31% of the amount over $78,750
$ 127,500 - $ 250,000
$33,199 + 36% of the amount over $127,500
$ 250,000 +
$77,299 + 39.6% of the amount over $250,000
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗŗȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
Table 7. Tax Rates, Personal Exemptions, and Standard Deductions, 1995
Personal Exemptions
$2,500
Standard Deductions
Joint
$6,550
Single
3,900
Head of Household
5,750
Additional Standard Deductions for the Elderly and the Blind
Joint
$750
Single/Head of Household
950
Marginal Income Tax Rates, Joint Returns
If taxable income is:
Then, tax is:
$ 0 - $ 39,000
15% of the amount over $ 0
$ 39,000 - $ 94,250
$5,850 + 28% of the amount over $39,000
$ 94,250 - $ 143,600
$21,320 + 31% of the amount over $94,250
$ 143,600 - $ 256,500
$36,619 + 36% of the amount over $143,600
$ 256,500 +
$77,263 + 39.6% of the amount over $256,500
Marginal Income Tax Rates, Single Returns
If taxable income is:
Then, tax is:
$ 0 - $ 23,350
15% of the amount over $ 0
$ 23,350 - $ 56,550
$3,503 + 28% of the amount over $23,350
$ 56,550 - $ 117,950
$12,799 + 31% of the amount over $56,550
$ 117,950 - $ 256,500
$31,833 + 36% of the amount over $117,950
$ 256,500 +
$81,711 + 39.6% of the amount over $256,500
Marginal Income Tax Rates, Heads of Households
If taxable income is:
Then, tax is:
$ 0 - $ 31,250
15% of the amount over $ 0
$ 31,250 - $ 80,750
$4,688 + 28% of the amount over $31,250
$ 80,750 - $ 130,800
$18,548 + 31% of the amount over $80,750
$ 130,800 - $ 256,500
$34,063 + 36% of the amount over $130,800
$ 256,500 +
$79,315 + 39.6% of the amount over $256,500
Table 8. Tax Rates, Personal Exemptions, and Standard Deductions, 1996
Personal Exemptions
$2,550
Standard Deductions
Joint
$6,700
Single
4,000
Head of Household
5,900
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗŘȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
Additional Standard Deductions for the Elderly and the Blind
Joint
$800
Single/Head of Household
1,000
Marginal Income Tax Rates, Joint Returns
If taxable income is:
Then, tax is:
$ 0 - $ 40,100
15% of the amount over $ 0
$ 40,100 - $ 96,900
$6,015 + 28% of the amount over $40,100
$ 96,900 - $ 147,700
$21,919 + 31% of the amount over $96,900
$ 147,700 - $ 263,750
$37,667 + 36% of the amount over $147,700
$ 263,750 +
$79,445 + 39.6% of the amount over $263,750
Marginal Income Tax Rates, Single Returns
If taxable income is:
Then, tax is:
$ 0 - $ 24,000
15% of the amount over $ 0
$ 24,000 - $ 58,150
$3,600 + 28% of the amount over $24,000
$ 58,150 - $ 121,300
$13,162 + 31% of the amount over $58,150
$ 121,300 - $ 263,750
$32,739 + 36% of the amount over $121,300
$ 263,750 +
$84,021 + 39.6% of the amount over $263,750
Marginal Income Tax Rates, Heads of Households
If taxable income is:
Then, tax is:
$ 0 - $ 32,150
15% of the amount over $ 0
$ 32,150 - $ 83,050
$4,823 + 28% of the amount over $32,150
$ 83,050 - $ 134,500
$19,075 + 31% of the amount over $83,050
$ 134,500 - $ 263,750
$35,025 + 36% of the amount over $134,500
$ 263,750 +
$81,555 + 39.6% of the amount over $263,750
Table 9. Tax Rates, Personal Exemptions, and Standard Deductions, 1997
Personal Exemptions
$2,650
Standard Deductions
Joint
$6,900
Single
4,150
Head of Household
6,050
Additional Standard Deductions for the Elderly and the Blind
Joint
$800
Single/Head of Household
1,000
Marginal Income Tax Rates, Joint Returns
If taxable income is:
Then, tax is:
$ 0 - $ 41,200
15% of the amount over $ 0
$ 41,200 - $ 99,600
$6,180 + 28% of the amount over $41,200
$ 99,600 - $ 151,750
$22,532 + 31% of the amount over $99,600
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗřȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
$ 151,750 - $ 271,050
$38,699 + 36% of the amount over $151,750
$ 271,050 +
$81,647 + 39.6% of the amount over $271,050
Marginal Income Tax Rates, Single Returns
If taxable income is:
Then, tax is:
$ 0 - $ 24,650
15% of the amount over $ 0
$ 24,650 - $ 59,750
$3,698 + 28% of the amount over $24,650
$ 59,750 - $ 124,650
$13,526 + 31% of the amount over $59,750
$ 124,650 - $ 271,050
$33,645 + 36% of the amount over $124,650
$ 271,050 +
$86,349 + 39.6% of the amount over $271,050
Marginal Income Tax Rates, Heads of Households
If taxable income is:
Then, tax is:
$ 0 - $ 33,050
15% of the amount over $ 0
$ 33,050 - $ 83,350
$4,958 + 28% of the amount over $33,050
$ 83,350 - $ 138,200
$19,602 + 31% of the amount over $85,350
$ 138,200 - $ 271,050
$35,986 + 36% of the amount over $138,200
$ 271,050 +
$83,812 + 39.6% of the amount over $271,050
Table 10. Tax Rates, Personal Exemptions, and Standard Deductions, 1998
Personal Exemptions
$2,700
Standard Deductions
Joint
$7,100
Single
4,250
Head of Household
6,250
Additional Standard Deductions for the Elderly and the Blind
Joint
$850
Single/Head of Household
1,050
Maginal Income Tax Rates, Joint Returns
If taxable income is:
Then, tax is:
$ 0 - $ 42,350
15% of the amount over $ 0
$ 42,350 - $ 102,300
$6,353 + 28% of the amount over $42,350
$ 102,300 - $ 155,950
$23,139 + 31% of the amount over $102,300
$ 155,950 - $ 278,450
$39,770 + 36% of the amount over $155,950
$ 278,450 +
$83,870 + 39.6% of the amount over $278,450
Marginal Income Tax Rates, Single Returns
If taxable income is:
Then, tax is:
$ 0 - $ 25,350
15% of the amount over $ 0
$ 25,350 - $ 61,400
$3,803 + 28% of the amount over $25,350
$ 61,400 - $ 128,100
$13,897 + 31% of the amount over $61,400
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗŚȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
$ 128,100 - $ 278,450
$34,574 + 36% of the amount over $128,100
$ 278,450 +
$88,700 + 39.6% of the amount over $278,450
Marginal Income Tax Rates, Heads of Households
If taxable income is:
Then, tax is:
$ 0 - $ 33,950
15% of the amount over $ 0
$ 33,950 - $ 87,700
$5,093 + 28% of the amount over $33,950
$ 87,700 - $ 142,000
$20,143 + 31% of the amount over $87,700
$ 142,000 - $ 278,450
$36,976+ 36% of the amount over $142,000
$ 278,450 +
$86,098 + 39.6% of the amount over $278,450
Table 11. Tax Rates, Personal Exemptions, and Standard Deductions, 1999
Personal Exemptions
$2,750
Standard Deductions
Joint
$7,200
Single
4,300
Head of Household
6,350
Additional Standard Deductions for the Elderly and the Blind
Joint
$850
Single/Head of Household
1,050
Marginal Income Tax Rates, Joint Returns
If taxable income is:
Then, tax is:
$ 0 - $ 43,050
15% of the amount over $ 0
$ 43,050 - $ 104,050
$6,458 + 28% of the amount over $43,050
$ 104,050 - $ 158,550
$23,538 + 31% of the amount over $104,050
$ 158,550 - $ 283,150
$40,433 + 36% of the amount over $158,550
$ 283,150 +
$85,289 + 39.6% of the amount over $283,150
Marginal Income Tax Rates, Single Returns
If taxable income is:
Then, tax is:
$ 0 - $ 25,750
15% of the amount over $ 0
$ 25,750 - $ 62,450
$3,863 + 28% of the amount over $25,750
$ 62,450 - $ 130,250
$14,139 + 31% of the amount over $62,450
$ 130,250 - $ 283,150
$35,157 + 36% of the amount over $130,250
$ 283,150 +
$90,201 + 39.6% of the amount over $283,150
Marginal Income Tax Rates, Heads of Households
If taxable income is:
Then, tax is:
$ 0 - $ 34,550
15% of the amount over $ 0
$ 34,550 - $ 89,150
$5,183 + 28% of the amount over $34,550
$ 89,150 - $ 144,400
$20,471 + 31% of the amount over $89,150
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗśȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
$ 144,400 - $ 283,150
$37,598 + 36% of the amount over $144,440
$ 283,150 +
$87,548 + 39.6% of the amount over $283,150
Table 12. Tax Rates, Personal Exemptions, and Standard Deductions, 2000
Personal Exemptions
$2,800
Standard Deductions
Joint
$7,350
Single
4,400
Head of Household
6,450
Additional Standard Deductions for the Elderly and the Blind
Joint
$850
Single/Head of Household
1,100
Marginal Income Tax Rates, Joint Returns
If taxable income is:
Then, tax is:
$ 0 - $ 43,850
15% of the amount over $ 0
$ 43,850 - $ 105,950
$6,578 + 28% of the amount over $43,850
$ 105,950 - $ 161,450
$23,966 + 31% of the amount over $105,950
$ 161,450 - $ 288,350
$41,171 + 36% of the amount over $161,450
$ 288,350 +
$86,855 + 39.6% of the amount over $288,350
Marginal Income Tax Rates, Single Returns
If taxable income is:
Then, tax is:
$ 0 - $ 26,250
15% of the amount over $ 0
$ 26,250 - $ 63,550
$3,938 + 28% of the amount over $26,250
$ 63,550 - $ 132,600
$14,382 + 31% of the amount over $63,550
$ 132,600 - $ 288,350
$35,787 + 36% of the amount over $132,600
$ 288,350 +
$91,857 + 39.6% of the amount over $288,350
Marginal Income Tax Rates, Heads of Households
If taxable income is:
Then, tax is:
$ 0 - $ 35,150
15% of the amount over $ 0
$ 35,150 - $ 90,800
$5,273 + 28% of the amount over $35,150
$ 90,800 - $ 147,050
$20,855 + 31% of the amount over $90,800
$ 147,050 - $ 288,350
$38,292 + 36% of the amount over $147,050
$ 288,350 +
$89,160 + 39.6% of the amount over $288,350
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗŜȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
Table 13. Tax Rates, Personal Exemptions, and Standard Deductions, 2001
Personal Exemptions
$2,900
Standard Deductions
Joint
$7,600
Single
4,550
Head of Household
6,650
Additional Standard Deductions for the Elderly and the Blind
Joint
$900
Single/Head of Household
1,100
Marginal Income Tax Rates, Joint Returns
If taxable income is:
Then, tax is:
$ 0 - $ 45,200
15% of the amount over $ 0
$ 45,200 - $ 109,250
$6,780 + 27.5% of the amount over $45,200
$ 109,250 - $ 166,500
$24,394 + 30.5% of the amount over $109,250
$ 166,500 - $ 297,350
$41,855 + 35.5% of the amount over $166,500
$ 297,350 +
$88,307 + 39.1% of the amount over $297,350
Marginal Income Tax Rates, Single Returns
If taxable income is:
Then, tax is:
$ 0 - $ 27,050
15% of the amount over $ 0
$ 27,050 - $ 65,550
$4,058 + 27.5% of the amount over $27,050
$ 65,550 - $ 136,750
$14,646 + 30.5% of the amount over $65,550
$ 136,750 - $ 297,350
$36,362 + 35.5% of the amount over $136,750
$ 297,350 +
$93,375 + 39.1% of the amount over $297,350
Marginal Income Tax Rates, Heads of Households
If taxable income is:
Then, tax is:
$ 0 - $ 36,250

15% of the amount over $ 0
$ 36,250 - $ 93,650
$5,438 + 27.5% of the amount over $36,250
$ 93,650 - $ 151,650
$21,223 + 30.5% of the amount over $93,650
$ 151,650 - $ 297,350
$38,913 + 35.5% of the amount over $151,650
$ 297,350 +
$90,637 + 39.1% of the amount over $297,350
Table 14. Personal Exemptions and Standard Deductions, 2002
Personal Exemptions
$3,000
Standard Deductions:
Joint
$7,850
Single
$4,700
Head of Household
$6,900
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗŝȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
Additional Standard Deductions for the Elderly and the Blind:
Joint
$900
Single/Head of Household
$1,150
Table 15. Marginal Income Tax Rates, 2002
Joint Returns
If taxable income is:
Then, tax is:
$ 0
to
$12,000
10% of the amount over $0
$12,000
to
$46,700
$1,200 plus 15% of the amount over $12,000
$46,700
to
$112,850
$6,405 plus 27% of the amount over $46,700
$112,850
to
$171,950
$24,266 plus 30% of the amount over $112,850
$171,950
to
$307,050
$41,996 plus 35% of the amount over $171,950
$307,050 plus

$89,281 plus 38.6% of the amount over $307,050
Single Returns
If taxable income is:
Then, tax is:
$0
to
$6,000
10% of the amount over $0
$6,000
to
$27,950
$600 plus 15% of the amount over $6,000
$27,950
to
$67,700
$3,893 plus 27% of the amount over $27,950
$67,700
to
$141,250
$14,626 plus 30% of the amount over $67,700
$141,250
to
$307,050
$36,691 plus 35% of the amount over $141,250
$307,050 plus

$94,721 plus 38.6% of the amount over $307,050
Heads of Households
If taxable income is:
Then, tax is:
$0
to
$10,000
10% of the amount over $0
$10,000
to
$37,450
$1,000 plus 15% of the amount over $10,000
$37,450
to
$96,700
$5,118 plus 27% of the amount over $37,450
$96,700
to
$156,600
$21,116 plus 30% of the amount over $96,700
$156,600
to
$307,050
$39,086 plus 35% of the amount over $156,600
$307,050 plus

$91,744 plus 38.6% of the amount over $307,050
Table 16. Marginal Income Tax Rates, 2003 Under Prior Law
(Pre-Jobs and Growth Tax Relief Reconciliation Act)
Joint Returns
If taxable income is:
Then, tax is:
$ 0
to
$12,000
10% of the amount over $0
$12,000
to
$47,450
$1,200 plus 15% of the amount over $12,000
$47,450
to
$114,650
$6,518 plus 27% of the amount over $47,450
$114,650
to
$174,700
$24,662 plus 30% of the amount over $114,650
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗŞȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
$174,700 to
$311,950
$42,677 plus 35% of the amount over $174,700
$311,950 plus

$90,714 plus 38.6% of the amount over $311,950
Standard Deduction for a joint return was $7,950
Single Returns
If taxable income is:
Then, tax is:
$0
to
$6,000
10% of the amount over $0
$6,000
to
$28,400
$600 plus 15% of the amount over $6,000
$28,400
to
$68,800
$3,960 plus 27% of the amount over $28,400
$68,800
to
$143,500
$14,868 plus 30% of the amount over $68,800
$143,500
to
$311,950
$37,278 plus 35% of the amount over $143,500
$311,950 plus

$96,236 plus 38.6% of the amount over $311,950
Standard deduction for a single return is $4,750
Heads of Households
If taxable income is:
Then, tax is:
$0
to
$10,000
10% of the amount over $0
$10,000
to
$38,050
$1,000 plus 15% of the amount over $10,000
$38,050
to
$98,250
$5,208 plus 27% of the amount over $38,050
$98,250
to
$159,100
$21,462 plus 30% of the amount over $98,250
$159,100
to
$311,950
$39,717 plus 35% of the amount over $159,100
$311,950 plus

$93,214 plus 38.6% of the amount over $311,950
Standard deduction for head of household return is $7,000
Table 17. Personal Exemptions and Standard Deductions, Limitation on Itemized
Deductions, and the Personal Exemption Phaseout, 2003
Personal Exemptions
$3,050
Standard Deductions:
Joint
$9,500
Single
$4,750
Head of Household
$7,000
Additional Standard Deductions for the Elderly and the Blind:
Joint
$950
Single/Head of Household
$1,150
Limitation on itemized deductions:
$139,500
Phase out of personal exemptions:
Joint
$209,250
Head of household
$174,400
Single
$139,500
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗşȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
Table 18. Marginal Income Tax Rates, 2003
Joint Returns
If taxable income is:
Then, tax is:
$ 0
to
$14,000
10% of the amount over $0
$14,000
to
$56,800
$1,400 plus 15% of the amount over $14,000
$56,800
to
$114,650
$7,820 plus 25% of the amount over $56,800
$114,650
to
$174,700
$22,283 plus 28% of the amount over $114,650
$174,700
to
$311,950
$39,097 plus 33% of the amount over $174,700
$311,950 plus

$84,390 plus 35% of the amount over $311,950
Single Returns
If taxable income is:
Then, tax is:
$0
to
$7,000
10% of the amount over $0
$7,000
to
$28,400
$700 plus 15% of the amount over $7,000
$28,400
to
$68,800
$3,910 plus 25% of the amount over $28,400
$68,800
to
$143,500
$14,010 plus 28% of the amount over $68,800
$143,500
to
$311,950
$34,926 plus 33% of the amount over $143,500
$311,950 plus

$90,515 plus 35% of the amount over $311,950
Heads of Households
If taxable income is:
Then, tax is:
$0
to
$10,000
10% of the amount over $0
$10,000
to
$38,050
$1,000 plus 15% of the amount over $10,000
$38,050
to
$98,250
$5,208 plus 25% of the amount over $38,050
$98,250
to
$159,100
$20,258 plus 28% of the amount over $98,250
$159,100
to
$311,950
$37,296 plus 33% of the amount over $159,100
$311,950 plus

$87,737 plus 35% of the amount over $311,950
Table 19. Personal Exemptions and Standard Deductions, Limitation on Itemized
Deductions, and the Personal Exemption Phaseout, 2004
Personal Exemptions
$3,100
Standard Deductions:
Joint
$9,700
Single
$4,850
Head of Household
$7,150
Additional Standard Deductions for the Elderly and the Blind:
Joint
$950
Single/Head of Household
$1,200
Limitation on itemized deductions:
$142,700
Phase out of personal exemptions:
Joint
$214,050
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŘŖȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
Head of household
$178,350
Single
$142,700
Table 20. Marginal Income Tax Rates, 2004
Joint Returns
If taxable income is:
Then, tax is:
$ 0
to
$14,300
10% of the amount over $0
$14,300
to
$58,100
$1,430 plus 15% of the amount over $14,300
$58,100
to
$117,250
$8,000 plus 25% of the amount over $58,100
$117,250
to
$178,650
$22,788 plus 28% of the amount over $117,250
$178,650
to
$319,100
$39,980 plus 33% of the amount over $178,650
$319,100 plus

$86,328 plus 35% of the amount over $319,100
Single Returns
If taxable income is:
Then, tax is:
$0
to
$7,150
10% of the amount over $0
$7,150
to
$29,050
$715 plus 15% of the amount over $7,150
$29,050
to
$70,350
$4,000 plus 25% of the amount over $29,050
$70,350
to
$146,750
$14,325 plus 28% of the amount over $70,350
$146,750
to
$319,100
$35,717 plus 33% of the amount over $146,750
$319,100 plus

$92,593 plus 35% of the amount over $319,100
Heads of Households
If taxable income is:
Then, tax is:
$0
to
$10,200
10% of the amount over $0
$10,200
to
$38,900
$1,020 plus 15% of the amount over $10,200
$38,900
to
$100,500
$5,325 plus 25% of the amount over $38,900
$100,500
to
$162,700
$20,725 plus 28% of the amount over $100,500
$162,700
to
$319,100
$38,141 plus 33% of the amount over $162,700
$319,100 plus

$89,753 plus 35% of the amount over $319,100
Table 21. Personal Exemptions, Standard Deductions, Limitation on Itemized
Deductions and the Personal Exemption Phase Out Thresholds, 2005
Personal Exemptions
$3,200
Standard Deductions:
Joint
$10,000
Single
$5,000
Head of Household
$7,300
Additional Standard Deductions for the Elderly and the Blind:
Joint (each spouse)
$1,000
Single/Head of Household
$1,250
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
Řŗȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
Limitation on itemized deductions:
$145,950
Phase out of personal exemptions:
Joint
$218,950
Head of household
$182,450
Single
$145,950
Table 22. Marginal Income Tax Rates, 2005
Joint Returns
If taxable income is:
Then, tax is:
$ 0
to
$14,600
10% of the amount over $0
$14,600
to
$59,400
$1,460 plus 15% of the amount over $14,600
$59,400
to
$119,950
$8,180 plus 25% of the amount over $59,400
$119,950
to
$182,800
$23,318 plus 28% of the amount over $119,950
$182,800
to
$326,450
$40,916 plus 33% of the amount over $182,800
$326,450 plus

$88,321 plus 35% of the amount over $326,450
Single Returns
If taxable income is:
Then, tax is:
$0
to
$7,300
10% of the amount over $0
$7,300
to
$29,700
$730 plus 15% of the amount over $7,300
$29,700
to
$71,950
$4,090 plus 25% of the amount over $29,700
$71,950
to
$150,150
$14,653 plus 28% of the amount over $71,950
$150,150
to
$326,450
$36,549 plus 33% of the amount over $150,150
$326,450 plus

$94,728 plus 35% of the amount over $326,450
Heads of Households
If taxable income is:
Then, tax is:
$0
to
$10,450
10% of the amount over $0
$10,450
to
$39,800
$1,045 plus 15% of the amount over $10,450
$39,800
to
$102,800
$5,448 plus 25% of the amount over $39,800
$102,800
to
$166,450
$21,198 plus 28% of the amount over $102,800
$166,450
to
$326,450
$39,020 plus 33% of the amount over $166,450
$326,450 plus

$91,820 plus 35% of the amount over $326,450
Table 23. 2005 EITC Indexed Levels
No

One
Two or More
Children
Child
Children
Credit Rate
7.65%
34%
40%
Maximum credit earnings
$5,220
$7,830
$11,000
Maximum credit
$399
$2,662
$4,400
Credit phaseout rate
7.65%
15.98%
21.06%
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŘŘȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
No

One
Two or More
Children
Child
Children
Phaseout Range:
$6,530
$14,370
$14,370
$11,750
$31,030
$35,263
Phaseout Range, Married Couples:
Start $8,530
$16,370
$16,370
End $13,750
$33,030
$37,263
Note: For more information on the earned income tax credit, see CRS Report RL31768, The Earned Income Tax
Credit (EITC): An Overview, by Christine Scott.
Table 24. Personal Exemptions, Standard Deductions, Limitation on Itemized
Deductions and the Personal Exemption Phase Out Thresholds, 2006
Personal Exemptions
$3,300
Standard Deductions:
Joint
$10,300
Single
$5,150
Head of Household
$7,550
Additional Standard Deductions for the Elderly and the Blind:
Joint (each spouse)
$1,000
Single/Head of Household
$1,250
Limitation on itemized deductions:
$150,500
Phase out of personal exemptions:
Joint
$225,750
Head of household
$188,150
Single
$150,500
Table 25. Marginal Income Tax Rates, 2006
Joint Returns
If taxable income is:
Then, tax is:
$ 0
to
$15,100
10% of the amount over $0
$15,100
to
$61,300
$1,510 plus 15% of the amount over $15,100
$61,300
to
$123,700
$8,440 plus 25% of the amount over $61,300
$123,700
to
$188,450
$24,040 plus 28% of the amount over $123,700
$188,450
to
$336,550
$42,170 plus 33% of the amount over $188,450
$336,550 plus

$91,043 plus 35% of the amount over $336,550
Single Returns
If taxable income is:
Then, tax is:
$0
to
$7,550
10% of the amount over $0
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
Řřȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
$7,550 to
$30,650
$755 plus 15% of the amount over $7,550
$30,650
to
$74,200
$4,220 plus 25% of the amount over $30,650
$74,200
to
$154,800
$15,108 plus 28% of the amount over $74,200
$154,800
to
$336,550
$37,676 plus 33% of the amount over $154,800
$336,550 plus

$97,653 plus 35% of the amount over $336,550
Heads of Households
If taxable income is:
Then, tax is:
$0
to
$10,750
10% of the amount over $0
$10,750
to
$41,050
$1,075 plus 15% of the amount over $10,750
$41,050
to
$106,000
$5,620 plus 25% of the amount over $41,050
$106,000
to
$171,650
$21,858 plus 28% of the amount over $106,000
$171,650
to
$336,550
$40,240 plus 33% of the amount over $171,650
$336,550 plus

$94,657 plus 35% of the amount over $336,550
Table 26. 2006 EITC Indexed Levels
No

One
Two or More
Children
Child
Children
Credit Rate
7.65%
34%
40%
Maximum credit earnings
$5,380
$8,080
$11,340
Maximum credit
$412
$2,747
$4,536
Credit phaseout rate
7.65%
15.98%
21.06%
Phaseout Range:
$6,740
$14,810
$14,810
$12,120
$32,001
$36,348
Phaseout Range, Married Couples:
Start $8,740
$16,810
$16,810
End $14,120
$34,001
$38,348
Note: For more information on the earned income tax credit, see CRS Report RL31768, The Earned Income Tax
Credit (EITC): An Overview, by Christine Scott.
Table 27. Personal Exemptions, Standard Deductions, Limitation on Itemized
Deductions and the Personal Exemption Phase Out Thresholds, 2007
Personal Exemptions
$3,400
Standard Deductions:
Joint
$10,700
Single
$5,350
Head of Household
$7,850
Additional Standard Deductions for the Elderly and the Blind:
Joint (each spouse)
$1,050
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŘŚȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
Single/Head of Household
$1,300
Limitation on itemized deductions:
$156,400
Phase out of personal exemptions:
Joint
$234,600
Head of household
$195,500
Single
$156,400
Note: Preliminary, based on information contained in “A Summary of 2007 Inflation Adjustments Impacting
Individuals,” by James C. Young, Tax Notes Today, September 18, 2006.
Table 28. Marginal Income Tax Rates, 2007
Joint Returns
If taxable income is:
Then, tax is:
$ 0
to
$15,650
10% of the amount over $0
$15,650
to
$63,700
$1,565 plus 15% of the amount over $15,650
$63,700
to
$128,500
$8,773 plus 25% of the amount over $63,700
$128,500
to
$195,850
$24,973 plus 28% of the amount over $128,500
$195,850
to
$349,700
$43,831 plus 33% of the amount over $195,850
$349,700 plus

$94,601 plus 35% of the amount over $349,700
Single Returns
If taxable income is:
Then, tax is:
$0
to
$7,825
10% of the amount over $0
$7,825
to
$31,850
$783 plus 15% of the amount over $7,825
$31,850
to
$77,100
$4,386 plus 25% of the amount over $31,850
$77,100
to
$160,850
$15,699 plus 28% of the amount over $77,100
$160,850
to
$349,700
$39,149 plus 33% of the amount over $160,850
$349,700 plus

$101,469 plus 35% of the amount over $349,700
Heads of Households
If taxable income is:
Then, tax is:
$0
to
$11,200
10% of the amount over $0
$11,200
to
$42,650
$1,120 plus 15% of the amount over $11,200
$42,650
to
$110,100
$5,838 plus 25% of the amount over $42,650
$110,100
to
$178,350
$22,700 plus 28% of the amount over $110,100
$178,350
to
$349,700
$41,810 plus 33% of the amount over $178,350
$349,700 plus

$98,356 plus 35% of the amount over $349,700
Note: Preliminary, based on information contained in “A Summary of 2007 Inflation Adjustments Impacting
Individuals,” by James C. Young, Tax Notes Today, September 18, 2006.

˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
Řśȱ

—?’Ÿ’?žŠ•ȱ —Œ˜–ŽȱŠ¡ȱŠ?ŽœǱȱŗşŞşȱ?‘›˜ž?‘ȱŘŖŖŝȱ
ȱ
ž?‘˜›ȱ˜—?ŠŒ?ȱ —?˜›–Š?’˜—ȱ

Gregg A. Esenwein

˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŘŜȱ