Due to adjustments of the income tax law for inflation, tax payers may see a nice benefit when they prepare their tax returns. The reason is that if your 2008 income remained the same from 2007, your tax bill will decline.

The higher standard deduction and exemption amounts and the inflation-adjusted tax brackets will now produce a $130 savings for a single person who earns $50,000 and claims the standard deduction. For a  married couple who earned $100,000 in 2007 and ’08 and also has two children, will be pleasantly surprised and enjoy a $310 savings.  Just say thank you to the inflation adjustments. Because of these numbers, you will see tax savings when you file your 2008 return this coming spring.

The personal exemption, which you can claim for yourself and each of your dependents, is $3,500 for 2008. This amount is $100 higher compared to the previous tax year. For people in the 25% tax bracket, you will save $25 for each exemption claimed. For both a husband and wife with two kids, the savings will amount up to $100.

The standard deduction, which is used by nearly two-thirds of all taxpayers, increases for each filing status. Single people will get a $100 hike from 2007, to $5,450. Married couples filing jointly will see their standard deduction rise to $10,900, an amount of $200 more than they claimed on 2007 returns. The standard deduction for heads of household who do not itemize deductions increases to $8,000, up $150.

The tax brackets have become broader; meaning more of your income is taxed at lower rates. Thanks to inflation in the past year, the 10%, 15%, 25%, 28%, 33%, and 35% tax brackets all kick in at approximately 2% higher levels of income than in 2007.

For example, the 10% bracket on 2008 joint returns covers the first $16,050 of taxable income. That’s $400 more than in 2007. Taxing that amount at 10% rather than 15% saves couples $20. The higher your income, the more you save as more dollars fall into lower brackets. See our 2008 Tax Tables.

Based on recently released federal figures, food inflation has slowed in October but grocery prices are 7.5 percent higher compared to last year.

What these means for consumers as the economy weakens further, is a shift in how they purchase food. Coupon usage is up. Store label brands are often now the choice over national brands. Beef lovers are even switching to cheaper cuts of meat.  When will this madness end?

As Thanksgiving quickly approaches, it’s going to cost quite a bit more than last year.  Did somebody stuff my turkey with gold?
 
The American Farm Bureau conducts an annual survey pricing food items needed for a typical Thanksgiving dinner. Get ready for some turkey sticker shock.

- A 16 pound turkey is up 8.3% versus 2007.
- 3 pounds of sweet potatoes is up 1.3% versus 2007.
- 14 ounces of cube stuffing is up 7.1% versus 2007.
- 12 ounces of fresh cranberries is up 11.8% versus 2007.
- 12 bread rolls are up 16.4% versus 2007.

It’s not all bad news. There is a silver lining after all …..
- 1 gallon of whole milk is down 2.6% versus 2007.

Got milk?