Most Relevant 2016 Inflation and Tax Adjustments for Taxpayers

The IRS recently released the 2016 inflation adjustments for over 50 tax provisions. Below is a list of the most relevant items for taxpayers:

                                                                                                          2015             2016

Tax Rate is 39.6% When Taxable Income Exceeds

                                                                                       Single         413,200      415,050

                              Married, filing jointly & surviving spouse        464,850      466,950

 

Limitation for Itemized Deductions – Income Exceeds

                                                                       Single        258,250       259,400

                  Married, filing jointly & surviving spouse        309,900       311,300

 

Personal Exemption Amount                                                             4,000            4,050

Phase-out begins when income exceeds

Single    258,250           259,400

 Married, filing jointly & surviving spouse     309,900           311,300

 

Nanny Tax Threshold                                                                      1,900               2,000

 

Standard Deduction– amount for filing single will remain at $6,300 and married filing jointly & surviving spouses remain will remain at $12,600 for 2016

Pension Plans– most pension plan limitations will remain the same for 2016

Social Security Wage Base– maximum earnings subject to the Social Security component of the FICA tax will remain at $118,500 for 2016

For the complete list of 2016 adjustments, read the Revenue Procedure 2015-53.