December 14, 1992
Inflation Adjustments Raise 1993 Tax Benefits
Taxpayers looking ahead and planning for their 1993 taxes will
find larger personal exemptions, standard deductions and earned
income credits, 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
Personal exemptions for 1993 are raised $50, to $2,350.
The standard deduction for married couples will be $6,200, an
increase of $200 over 1992. For single taxpayers the standard
deduction will be $3,700, an increase of $100. The extra standard
deductions for age and blindness remain at $700 for married
taxpayers and $900 for singles. The minimum standard deduction for
an individual who can be claimed as a dependent on another
taxpayer's return will remain at $600.
Indexing will expand the earned income credit for 1993.
Qualifying individuals with income up to $23,050-- a $680 higher
income threshold than in 1992-- can claim an earned income credit.
Also, the maximum earned income credit can be as much as $2,364 a
For married couples, the 15% tax bracket will extend up to
taxable income of $36,900, and $1,100 increase. The 28% bracket
will extend from $36,900 to $89,150, a $2,650 increase. For singles
the 15% bracket will rise $650 to $22,100 and the 28% bracket will
go up $1,600 to $53,500.
More people who pay expenses for higher education with U.S.
Savings Bonds may be able to exclude the interest from taxation
because of indexing. For 1993, married couples with income up to
$68,250 can exclude all qualifying savings bond interest from
taxable income. The 1992 income limit was $66,200. For all other
taxpayers the income limit will be $45,500, up from $44,150. The
exclusion phases out as income increases over those thresholds, and
is fully phased out at income levels of $98,250 for couples and
$60,500 for other taxpayers.
Tax laws designed to phase out the tax benefits of personal
exemptions and limit certain itemized deductions for high income
taxpayers will change for 1993. The personal exemption phaseout
will start for married couples with income above $162,700, and above
$108,450 for singles. For 1992, the phaseout for couples started at
income above $157,900, and above $105, 250 for singles.
The limitation on itemized deductions will affect taxpayers
with income over $108,450, up from the 1992 income level of
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