IRS Announced 1991 Indexed Tax Rate Tables

WASHINGTON - The Internal Revenue Service today announced the 1991 inflation adjusted income tax rate tables and the standard deduction, personal exemption, and earned income credit amounts. The IRS is announcing these amounts now for taxpayers to use in tax planning and making 1991 estimated tax payments beginning next April. They will also use these amounts when filing their 1991 income tax returns in 1992.

The Tax Reform Act of 1986 provides for these adjustments as a benefit for taxpayers so that inflation will not result in tax increases. Not all amounts subject to indexing increase every year. In general, the law requires inflation adjustments of less than $50 to be "rounded down" to zero.

For example, the additional standard deduction amounts for age and blindness for 1990 were $650 for married individuals and $800 for unmarried individuals who are not surviving spouses. When adjusted, the 1991 amount are $686.12 and $857.66, respectively. Using the statutory "rounding down" rule, the amount for married individuals remains $650 while the amount for unmarried individuals who are not surviving spouses increases to $850.

The standard deduction amounts for 1991 have increased to $5,700 for married individuals filing jointly and surviving spouses; $5,000 for heads of households; $3,400 for unmarried individuals and $2,850 for married individuals filing separately.

The personal exemption amount for 1991 has increased to $2,150, up from $2,050 in 1990.

In 1991, the maximum basic earned income credit will increase to $1,192 for a taxpayer with one qualifying child and $1,235 for a taxpayer with two or more qualifying children. The credit is allowed on the first $7,140 of earned income. The credit begins to phase out if the taxpayer's earned income or adjusted gross income exceeds $11,250.

The adjusted tax rate tables for 1991 are:

MARRIED INDIVIDUALS FILING JOINT RETURNS AND SURVIVING SPOUSES

If Taxable Income Is:            The Tax is:
Not Over $34,000                 15% of the taxable income

Over $34,000 (not over $82,150)  $5,100 plus 28% of the excess
                                 over $34,000.

Over $82,150                     $18,582 plus 31% of the excess
                                 over $82,150.


HEADS OF HOUSEHOLD

If Taxable Income is:            The Tax is:
Not over $27,300                 15% of the taxable income

Over $27,300 (not over $70,450)  $4,095 plus 28% of the
                                 excess over $27,300

Over $70,450                     $16,177 plus 31% of the
                                 excess over $70,450.


UNMARRIED INDIVIDUALS (OTHER THAN SURVIVING SPOUSES AND HEADS OF
HOUSEHOLDS)


If Taxable Income is:            The Tax is:
Not over $20,350                 15% of the taxable income

Over $20,350 (not over $49,300)  $3,052.50 plus 28% of the
                                 excess over $20,350

Over $49,300                     $11,158.50 plus 31% of the
                                 excess over $49,300.


MARRIED INDIVIDUALS FILING SEPARATE RETURNS


If Taxable Income is:             The Tax is:
Not over $17,000                  15% of the taxable income

Over $17,000 (not over $41,075)   $2,550 plus 28% of the
                                  excess over $17,000.

Over $41,075                      $9,291 plus 31% of the
                                  excess over $41,075


ESTATES AND TRUSTS


If Taxable Income is:             The Tax is:
Not over $3,450                   15% of the taxable income

Over $3,450 (not over $10,350)    $517.50 plus 28% of the
                                  excess over $3,450

Over $10,350                      $2,449.50 plus 31% of
                                  the excess over $10,350

The IRS also announced several other amounts inflation adjusted for the first time for 1991. These are:

• the standard deduction or dependents;
• reductions allowed against the unearned income of certain minor children subject to the "kiddie tax" at their parents' marginal rate;
• limitations on the tax-free portion of interest from US savings bonds redeemed to pay qualified higher education expenses.

Revenue Procedure 90-64, announcing these adjusted amounts, appears in Internal Revenue Bulletin No. 1990-53, dated December 31, 1990.

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