The IRS today has released the inflation adjusted income tax brackets, as well as other inflation adjustments that are normally made to the code. A couple of weeks ago, the updated retirement contribution limits were released.
There are 41 separate inflation adjustments that were released, and because this is Tax Playa.com, we will go through each and every one of them...
1. Personal Income Tax Brackets:
MFJ/QW |
HH |
S |
MFS | |
10% |
$0-$15560 |
$0-$11200 |
$0-$7825 |
$0-$7825 |
15% |
$15561-$63700 |
$11201-$42650 |
$7826-$31850 |
$7826-$31850 |
25% |
$63701-$128500 |
$42651-$110100 |
$31851-$77100 |
$31851-$64250 |
28% |
$128501-$195850 |
$110101-$178350 |
$77101-$160850 |
$64251-$97925 |
33% |
$195851-$349700 |
$178351-$349701 |
$160851-$349700 |
$97926-$174850 |
35% |
$349701- |
$349701- |
$349701- |
$174851- |
2. Kiddie Tax: Kicks in at $850 in unearned income.
3. Adoption Credit: $11,390. Phases out between AGI $170,820 and $210,820.
4. Refundable Child Tax Credit: Begins to be used after AGI $11,750
5a. Hope Credit: 100% of first $1100 of expenses, 50% of $1101-$2200 in expenses (total max of $1650).
5b. Lifetime Learning and Hope Credits disallowed after $47,000 in AGI ($94,000 MFJ)
6. Savers Credit phaseout:
MFJ |
HH |
All Others | |
50% |
$0-$31000 |
$0-$23250 |
$0-$15500 |
20% |
$31001-$34000 |
$23250-$25500 |
$15501-$17000 |
10% |
$34001-$52000 |
$25501-$39000 |
$17001-$26000 |
0% |
$52001- |
$39001- |
$26001- |
7. Earned Income Credit:
One Child |
Two + Children |
No Children | |
Earned Income |
$8390 |
$11790 |
$5590 |
Max Credit |
$2853 |
$4716 |
$428 |
Phaseout |
$15390-$33241 |
$15390-$37783 |
$7000-$12590 |
Phaseout MFJ |
$17390-$35241 |
$17390-$39783 |
$9000-$14590 |
Also, the excessive investment income amount is now $2900.
8. Low Income Housing Credit State Ceiling: the greater of $1.95 x state population, or $2.275 million.
9. AMT Exemption for Kiddie Tax child: $6300 plus child's earned income.
10. Transportation Mainline Pipeline Per Diem: $15
11. Standard Deduction:
MFJ/QW: $10700
HH: $7850
S/MFS: $5350
Dependents: greater of $850 or $300 + earned income (not to exceed $5350)
Additional deduction for aged and blind: $1050
12. Pease (Itemized Deduction) Phaseout begins at $156400 ($78200 for MFS)
13. Transportation Fringe Benefit: $110 mass transit, $215 parking
14. Education Savings Bonds Interest Exclusion Phaseout: $65600-$80600 ($98400-$128400 MFJ)
15. Adoption Assistance Program: capped at $11,390. Phases out between AGI $170,820 and $210,820.
16. Private Activity Bonds Cap: greater of $85 x state population or $256,235,000.
17. Safe Harbor Rules on Broker Commissions on Guaranteed Investment Contracts: cannot exceed the lesser of $33,000 or .02 percent of the base, and all contracts cannot exceed $93,000.
18. Personal Exemption: $3400 (minimum of $1133 for those with a phaseout). PEP phaseout:
MFJ/QW |
$234600-$357100 |
HH |
$195500-$318000 |
S |
$156400-$278900 |
MFS |
$117300-$178550 |
19. 179 Expensing: $112,000 depreciable asset limit; phases out between $450,000 and $562,000.
20. Long-term Care Insurance Premiums. These are allowable medical expenses for tax advantages, but the tax-advantaged amount varies based on age:
<40: $290
40-50: $550
50-60: $1110
60-70: $2950
70<: $3680
21. IRA Deductibility:
No pension, not MFS: no limits on deductibility
MFJ, One Pension: $156,000-$166,000 AGI
MFJ, Two Pensions: $83,000-$93,000 AGI
Others, One Pension: $52,000-$62,000 AGI
MFS: no deduction allowed
22. Medical Savings Accounts:
Single: deductible of $1900-$2850, out-of-pocket max of $3750
Family: deductible of $3750-$5650, out-of-pocket max of $6900
23. Student Loan Interest Deduction Phaseout
Non-MFJ: $55,000-$65,000 AGI
MFJ: $110,000-$130,000 AGI
24. Health Savings Accounts:
Single: deductible minimum is $1100; contribution limit is $2850; out-of-pocket max is $5500
Family: deductible minimum is $2200; contribution limit is $5650; out of pocket max is $11000
25. Roth IRA Contribution Phaseout
Non-MFJ: $99,000-$114,000
MFJ: $156,000-$166,000
MFS: $0
26. Dues Paid to Horticultural Organizations: $136
27. Insubstantial Benefit for Charitable Fundraisers: "low-cost" article is $8.90 or less; other benefits are $44.50 and $89.
28. Qualified Funeral Trust: cannot exceed $8800.
29. Ex-Pat Tax Trigger: average income of $136,000 for the five years prior to expatriation.
30. Foreign Earned Income Exclusion: $85,700
31. Valuation of Qualified Real Property in Decedent's Gross Estate Limit: $940,000
32. Gift Tax Exclusion: $12,000 ($125,000 in the case of a non-citizen spouse)
33. Tax on Arrow Shafts: $0.42 per shaft
34. Passenger Air Transportation Excise Tax: $15.10 per segment ($7.50 if Alaska or Hawaii)
35. Reporting Exception for Non-Deductible Lobbying Expenditure Limit: $95
36. Notice of Large Gifts from Foreign Persons Trigger: $13,258
37. Federal Tax Lien Not Valid:
--personal property in a casual sale: $1290
--mechanic's lienor on residential property: $6450
38. Property Exempt from Levy Limit:
--fuel, provisions, furniture, personal effects, firearms, livestock, poultry: $7720
--books and tools necessary for the trade or business of the taxpayer: $3860
39. Interest on 2% Portion of Estate Tax Payable in Portions: $1,250,000 base
40: Attorney Fee Award Limit: $170 per hour
41: Qualified Period Payment Awarded Under Long-Term Care Contract or Certain Life Insurance Contracts: $260
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