The standard deductions for single taxpayers, heads of households and married individuals will increase slightly in 2017, but the personal exemption is unchanged, the IRS said in an October 25 news release (IR-2016-139). Taxpayers will use the information when filing their returns in 2018, the IRS said.
According to the release, the personal exemption in tax year 2017 will be $4,050, just as it was in 2016, although a phase-out begins with adjusted gross incomes of $261,500 ($313,800 for married couples filing jointly). The exemption completely phases out at $384,000 ($436,300 for married couples filing jointly).
There will be a $50 increase in the standard deduction for heads of households in 2017, from $9,300 to $9,350. Married couples filing joint returns will receive $100 more in 2017, for a standard deduction of $12,700. Single taxpayers and married individuals filing separate returns will see a $50 increase—from $6,300 in 2016 to $6,350 in 2017.
According to the release, in tax year 2017, the 39.6 percent tax rate will apply to single taxpayers with incomes of more than $418,400 and to married taxpayers filing jointly who have incomes exceeding $470,700. For tax year 2016, these amounts were $415,050 and $466,950, respectively. Detailed information on the inflation adjustments and other tax rates—10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent—are available in Revenue Procedure 2016-55, the IRS said.
Other adjustments for tax year 2017 include:
- A $255 monthly limitation for the qualified transportation fringe benefit, up from $130 in 2016, putting it on par with the qualified parking limitation;
- A $102,100 foreign earned income exclusion, an increase from $101,300 in 2016; and
- A basic $5.49 million exclusion for estates of decedents dying in 2017, up from $5.45 million in 2016.
Not all things will increase, however. The IRS also announced that the current basic 401(k) plan annual contribution limit of $18,000 will remain unchanged in 2017. Similarly, the annual catch-up contribution limit for those age 50 and older will stay at $24,000 next year. The announcement was contained in Notice 2016-62 and a related news release, IR-2016-141. #IRS #taxplanning