Tax Brackets for 2010

By law, the thresholds for the marginal federal income tax brackets must change each year to keep pace with inflation. For 2010, those brackets are as follows:

Individual Taxpayers

• 10% on taxable income between $0 and $8,375
• 15% on taxable income between $8,376 and $34,000
• 25% on taxable income between $34,001 and $82,400
• 28% on taxable income between $82,401 and $171,850
• 33% on taxable income between $171,851 and $373,650
• 35% on taxable income over $373,651

Taxpayers Filing as Married, Filing Jointly or Qualifying Widow(er):

• 10% on taxable income between $0 and $16,750
• 15% on taxable income between $16,751 and $68,000
• 25% on taxable income between $68,001 and $137,300
• 28% on taxable income between $137,301 and $209,250
• 33% on taxable income between $209,251 and $373,650
• 35% on taxable income over $373,651

Taxpayers Filing as Head of Household:

• 10% on taxable income between $0 and $11,950
• 15% on taxable income between $11,951 and $45,550
• 25% on taxable income between $45,551 and $117,650
• 28% on taxable income between $117,651 and $190,550
• 33% on taxable income between $190,551 and $373,650
• 35% on taxable income over $373,651

Taxpayers Filing as Married, Filing Separately:

• 10% on taxable income between $0 and $8,375
• 15% on taxable income between $8,376 and $34,000
• 25% on taxable income between $34,001 and $68,650
• 28% on taxable income between $68,651 and $104,625
• 33% on taxable income between $104,626 and $186,825
• 35% on taxable income over $186,826

These tables indicate your marginal tax rate, meaning the top tax rate at which you pay. Keep in mind that our federal income tax system is progressive -- tax rates increase as taxable income increases. This means each taxpayer reporting the same filing status actually pays tax at the same rate for the same income. So, for example, you and Warren Buffett actually pay the same tax rate on the first $10,000 of taxable income (assuming you have the same filing status).

Tax brackets are generally announced just before the next tax year begins (for example, these 2010 tax brackets were announced in the fall of 2009). With inflation remaining low, expect to see similar tables next season.

US Dollar Declines vs. Commodity Currencies on Signs of Recovery

The US Dollar declined versus the higher-yielding currencies as the macroeconomic reports suggested that the economic recovery is underway, encouraging the investors to take more risk in seeking profits.

The University of Michigan index of the consumer sentiment in its revised edition showed the increase from 71.6 in November to 74.5 this month. The claims for the unemployment benefits in the US continued to decline, falling from 423,000 to 420,000 last week. The personal income in the US grew 0.3 percent in November, while the personal consumption rose by 0.4 percent.

The future reports may also provide evidences of the economic recovery. The experts predict that the Conference Board’s sentiment index would post the increase from 54.1 to 56.3 in November. The low market volatility also helped the investors’ risk sentiment to improve.

AUD/USD closed at 1.0042 after opening at 0.9990 and rising to the intraday high of 1.0065. NZD/USD closed at 0.7469 after it opened at 0.7401 and climbed as high as 0.7500.