California income taxes will get nudged even higher for 2009, thanks to the Consumer Price Index.
New tax brackets prepared by the Franchise Tax Board show that income taxes will rise slightly because of a 1.5 percent decline in the CPI.
That's in addition to the quarter-point increase in rates enacted by the Legislature in February as part of a deal to close the state's deficit.
Since 1982, tax brackets have been adjusted upward every year to account for inflation. It's a way of preventing Californians from paying higher taxes when their incomes merely keep pace with inflation.
But the system works in reverse, too. Because prices fell, tax brackets will fall, too.
In the 2008 rates, for instance, a single taxpayer had to earn at least $26,821 to reach the 6 percent income tax bracket. This year, the taxpayer will reach that bracket by earning as little as $26,419.
"You could pay the exact same wage in 2009 and pay more taxes," said Perry Ghilarducci, a Sacramento accountant and board member of the California Board of CPAs.
"That's a horrible result," he said.
Of course, there really is no 6 percent bracket anymore; it's now a 6.25 percent bracket because of the Legislature's move in February.
The new brackets haven't been released yet by the Franchise Tax Board but were published on Spidell's California Taxletter, a private tax-information service based in Anaheim.