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Minnesota tax backets expand for 2009

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Minnesota tax backets expand for 2009
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The Minnesota Department of Revenue announced that the state's individual income tax brackets for tax year 2009 will expand by about 4 percent.

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State law requires the department to adjust the brackets to compensate for increases in inflation.

Expanding the brackets prevents taxpayers from being pushed into higher income tax brackets solely because of inflationary raises in their income.

Since tax year 2000, Minnesota's income tax brackets have expanded by about 29 percent as a result of inflation.

The inflation rate is measured by the change in the U.S. Urban Consumer Price Index for the average of 12 months ending August 1999 to the average of 12 months ending August 2008.

The index measures annual inflationary changes in the cost of basic goods and services. The department adjusts the brackets by the inflation factor and rounds the result to the nearest $10.

The brackets apply to tax year 2009. Taxpayers who make quarterly payments of estimated tax should use the following rate schedule to determine their payments, which are due starting in April 2009.

Minnesota's tax rates remain the same.

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