From William Perez,
Your Guide to Tax Planning: U.S..
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Standard Deduction

Single: $5,450
Head of Household: $8,000
Married Filing Joint: $10,900
Married Filing Separately: $5,450
Qualifying Widow/Widower: $10,900
Dependent: $900-$5,450*
Additional Amount if Blind: $1,050
Additional Amount if age 65 or older: $1,050
More information about the standard deduction.
* Dependents must calculate their standard deduction using an IRS Worksheet.

Personal Exemption

Per taxpayer and dependent: $3,500
More information about personal exemptions.

Phaseout of Personal Exemptions

The amount you can claim for personal exemptions starts to phase out once you reach certain income thresholds. If your income is within these ranges, your personal exemptions will be reduced. If your income exceeds the amounts listed below, your personal exemption is completely eliminated.
Single: $159,950 - $282,450
Head of Household: $199,950 - $322,450
Married Filing Joint: $239,950 - $362,450
Married Filing Separately: $119,975 - $181,225
Qualifying Widow/Widower: $239,950 - $362,450
More information about the personal exemptions.

Retirement Plan Limits

You can save for retirement up to the maximum dollar limit. Maximum contributions vary by the type of retirement plan:
Traditional or Roth IRA: $5,000 ($6,000 if age 50 or older)*
SEP IRA: $46,000**
SIMPLE IRA: $10,500 ($13,000 if age 50 or older)
401(k) plan: $15,500 ($20,500 if age 50 or older)
403(b) plan: $15,500 ($20,500 if age 50 or older)
457 plan: $15,500 ($20,500 if age 50 or older)
Defined Contribution Pension: $46,000
Defined Benefit Pension: $185,000
More information about retirement planning.
*If you fund both a traditional and Roth IRA, your total contribution to cannot exceed $4,000 (or $5,000) combined.
**SEP IRA contributions are calculated on an IRS worksheet. Your maximum contribution may be less than $46,000.

New Zero Percent Capital Gains Tax Rate

Long-term capital gains are normally taxed at 5% or 15%. For 2008, the five-percent rate is reduced to zero percent. This applies to taxpayers in the 10% and 15% tax brackets.

Standard Mileage Rate for 2008

You can deduct the cost of driving a vehicle for business-use, for traveling to a doctor, when relocating for a new job, or when you are engaged in charitable activities. The 2008 standard rates for mileage are:

• 50.5 cents per mile for business,
• 19 cents per mile for medical or moving purposes, and
• 14 cents per mile for charitable service.

Expiring Tax Breaks

Tax laws often impose timelines during which a particular deduction or credit can be claimed. The following tax breaks are scheduled to expire at the end of 2007:

• Classroom expenses deduction
• Tuition and fees deduction
• Excluding charitable distributions from income
• Itemized deduction for sales taxes
• Nonbusiness energy tax credit
• First-time homebuyer credit (District of Columbia)
• Election to include non-combat pay for the purposes of calculating the Earned Income Credit.

More 2008 Tax Information

Tax Rates for 2008

Sources: Internal Revenue Service, Revenue Procedure 2007-66 (pdf), IR-2007-171, and IR-2007-192.