December 05, 1991
Inflation Adjustments Raise 1992 Tax Benefits
WASHINGTON - Taxpayers looking ahead and planning for
their 1992 taxes will find larger standard deductions, personal exemptions and earned
income credits, plus wider tax brackets that begin at higher income levels. Under federal
tax law, these amounts are indexed each year so that inflation does not erode these
benefits or push taxpayers into higher tax brackets.
Among the 1991 changes:
- A $300 rise in the standard deduction for couples, to $6,000; for singles, it goes up
$200, to $3,600;
- A $50 raise in the additional standard deductions for age and blindness, to $700 for
couples, $900 for singles; and
- A $150 boost in each exemption on the tax return, to $2,300 for 1992.
The earned income credit (EIC) -- a refundable tax break for low-income workers with a
child -- will be greater and will have a higher eligibility ceiling. The maximum 1992
basic EIC is $1,324 for a worker with one child and $1,384 if there are two or more
Taxpayers claiming the EIC may also be entitled to a health insurance credit of up to
$451 in 1992 and a credit of up to $376 for a child born in 1992. The total maximum amount
available to low-income families under these credits in 1992 will be $2,211, up from
$2,020 in 1991.
The income tax brackets also have been widened and begin at higher taxable income
levels. This keeps taxpayers in a tax bracket longer, lessening the effect of
"bracket creep" -- inflation pushing taxpayers into higher tax brackets when
their incomes increase.
Revenue Procedure 91-65, which provides all the 1992 inflation adjustments is attached
and will appear in Internal Revenue Bulletin No. 1991-50, dated Dec. 16, 1991.
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