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 tax brackets.

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 $153 increase.

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 $105,250.

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