News & Events

2009 Tax Changes
Seton Hall > News & Events 

Thursday, January 15, 2009
by: Dale McLeod

According to the Internal Revenue Service for 2009, personal exemptions and standard deductions will rise and tax brackets will widen because of inflationary adjustments. By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits, affecting virtually every taxpayer, will be adjusted for 2009. Key changes affecting 2009 returns include the following:

• The value of each personal and dependency exemption, available to most taxpapers, is $3,650, up $150 from 2008.
  
  
• The new standard deduction is $11,400 for married couples filing a joint return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household (up $350).
  
  
• Tax-bracket thresholds will increase for each filing status. For example, for a married couple filing a joint return, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $67,900, up from $65,100 in 2008.

Other tax changes include:

• The Social Security Administration issued the inflation-adjusted FICA base for 2009; it will be $106,800. As a result, employees' 6.2% FICA tax for 2009 will top out at $6,621.60. The 1.45% Medicare component has no wage limit. Employers pay a matching tax.
  
  
• Additionally, New Jersey Governor, John Corzine, signed the paid Family Leave Act. This law gives eligible employees up to six weeks of paid leave in any 12-month period to care for a seriously ill family member or to care for or bond with a new child. The benefit will be funded by a new tax on employee wages, beginning January 1, 2009. While additional taxation on employee earnings begins January 1, 2009, the employees will not have the option to exercise the paid leave benefit until July 1, 2009. Benefits will be entirely funded by employee payroll taxes. Employees will be taxed at a rate of 0.09% on wages up to the limit for temporary disability insurance (currently $27,700), rising to 0.12% in 2010. Thus, the maximum annual tax would be about $25 per employee in 2009 and $33 in 2010. More detailed information about this change will be forthcoming.

For more information please contact:
Dale McLeod
(973) 761-9645
mcleodda@shu.edu