- Each personal or dependent exemption is now worth $3,500, up $100 from 2007.
For people who don't itemize, the standard deduction for 2008 has increased to:
- $10,900 for married couples filing a joint return, and qualifying widows and widowers
- $5,450 for singles and married individuals filing separate returns
- $8,000 for heads of household
On state or local real estate taxes, the maximum deduction is $500, or $1,000 for joint filers. Net disaster losses from a federally declared disaster can increase the standard deduction.
ALTERNATIVE MINIMUM TAX
Exemption rises to:
- $69,950 for a married couple filing a joint return and qualifying widows and widowers
- $34,975 for a married person filing separately, up from $33,125
- $46,200 for singles and heads of household, up from $44,350
Under current law, these exemption amounts will drop to $45,000, $22,500 and $33,750, respectively, in 2009. Form 6251 and the AMT Calculator provide more information.
FIRST-TIME HOMEBUYER CREDIT
- Up to $7,500 for purchase of a principal residence between April 9, 2008, and June 30, 2009
- To qualify, you must be a first-time home buyer or have not owned a home during the previous three years.
- The credit is actually an interest-free loan and must be paid back over 15 years.
EARNED INCOME TAX CREDIT
The maximum earned income tax credit was raised to:
- $4,824 for people with two or more qualifying children
- $2,917 for those with one child
- $438 for people with no children
Maximum income levels also are up:
- $41,646 for those with two or more children
- $36,995 for people with one child
- $15,880 for those with no children
CAPITAL GAINS TAX
The 5 percent capital gains tax is reduced to zero for people with taxable income below:
- $65,100, if married filing jointly or qualifying widow or widower
- $32,550, if single or married filing separately
- $43,650, if head of household