Getting Started
Many tax-saving strategies aim to reduce taxable income. The goal, of course, is not to generate less income. Instead, the focus of your tax planning might be to find ways to have your income taxed at a lower rate, defer taxes on your income, or increase the amount of deductible expenses.
In looking at potentially deductible expenses, you'll want to identify those that are deductible in arriving at your adjusted gross income (AGI). Because many tax benefits are not available once AGI exceeds specified levels, claiming as many of these "above-the-line" deductions as possible can be very beneficial.
In addition to any above-the-line deductions you may have, you may claim either a standard deduction, set by the IRS annually, or specific actual expenses, called itemized deductions. You also may deduct personal exemptions for yourself, your spouse, and your dependents.
Each personal exemption you can claim in full reduces your taxable income by $3,650 in 2009. However, your deduction must be reduced if your AGI is more than $166,800 if you are a single filer, $208,500 if you file as a head of household, $250,200 if you are a married person filing jointly, or $125,100 if you are a married person filing separately.
The table below shows the federal income-tax rate schedules. Notice that they are graduated. This means that your income is taxed in stages — a certain amount at the lowest 10% rate, an amount over that at the 15% rate, and so on. The IRS adjusts the income brackets for inflation every year.
Individual Tax Rate Schedules
| Filing Status | Rate (%) | Taxable Income ($) Brackets |
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Single  |
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Head of Household  |
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Married Filing Jointly  |
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Married Filing Separately  |
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