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2007 Federal Personal Income Tax Rates
It is required by law that the Internal Revenue Service (IRS) alters its income tax tables and many other numbers each year so that the increase in the cost of living becomes apparent. Unfortunately it is the high income taxpayers who end up getting the largest tax breaks because of the changes in income brackets and inflation adjustments. These allow high income taxpayers to retain more of their itemized deductions and personal exemption amounts. |
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According to 2007 federal personal income tax rates, the taxable income of more than $349,700 will be taxed at a premium rate of 35 percent. This is an increase from 2006 when the amount was $336,550.
However, more people will become eligible in 2007 to make contributions to a Roth IRA. With a Roth IRA a person cannot deduct the contributions but the money contributed to a Roth IRA grows tax free, and withdrawals from a Roth IRA are tax free if the person ends up meeting certain criteria. Income limits for making deductible contributions to a traditional IRA by employees in an employer retirement plan will also increase in 2007.
Many decades ago, the Congress created the AMT -- Alternate Minimum Tax -- to ensure that most high income taxpayers end up paying at least some tax. However, the AMT was not indexed for inflation and this has ended up hitting the growing number of middle income taxpayers.
In 2006, the Congress allowed a one patch so that AMT would not affect millions of people across the U.S. and if they do not do anything in 2007, the AMT will end up affecting more than 26 million people which is a lot more than 2006 when the numbers were around 4 million.
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