2016 Tax Law Updates

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Federal Income Tax Brackets:

Married Filing Joint Return:

10%        from $0 to $18,550

15%        from $18,550 to $75,300

25%        from $75,300 to 151,900

28%        from $151,900 to $231,450

33%        from $231,450 to $413,350

35%        from $413,350 to $466,950

39.60%  from $466,950

Married Filing Separate Returns:

10%        from $0 to $9,275

15%        from $9,275 to $37,650

25%        from $37,650 to $75,950

28%        from $75,950 to $115,725

33%        from $115,725 to $206,675

35%        from $206,675 to $233,475

39.60%  from $233,475

Single:

10%        from $0 to $9,275

15%        from $9,275 to $37,650

25%        from $37,650 to $91,150

28%        from $91,150 to $190,150

33%        from $190,150 to $413,350

35%        from $413,350 to $415,050

39.60%  from $415,050

Head of Household:

10%        from $0 to $13,250

15%        from $13,250 to $50,400

25%        from $50,400 to $130,150

28%        from $130,150 to $210,800

33%        from $210,800 to $413,350

35%        from $413,350 to $441,000

39.60%  from $441,000

 

Contribution limits and phase out income thresholds for retirement savings accounts

Traditional IRA:

Contribution limit amounts remain the same – $5,500 or $6,500 for individuals over 50.

For individuals covered by an employer retirement plan the deduction phase-out ranges for modified adjusted gross income are:

  • Single and Head of Household - from $61,000 to $71,000.
  • Married Filing Joint Return, for covered spouse - from $98,000 to $118,000.
  • Married Filing Joint Return, for non-covered spouse  - from $184,000 to $194,000
  • Married Filing Separate Returns - from $0 to $10,000.

Roth IRA:

Contribution limit amounts remain the same - $5,500 or $6,500 for individuals over 50.

Contribution phase out ranges for adjusted gross income are:

  • Single and Head of Household - from $117,000 to $132,000.
  • Married Filing Joint Return - from $184,000 to $194,000.
  • Married Filing Separate Returns - from $0 to $10,000.

 

Personal Exemption Value

Personal exemption value for 2016 is set at $4,050.

Personal exemption phase-out starts when adjusted gross income exceeds threshold:

  • Married Filing joint Return           $311,300
  • Married Filing Separate Returns                $155,650
  • Single                                                    $259,400
  • Head of Household                         $285,350

Phase out step is $2,500 ($1,250 for Married Filing Separate Returns). For each $2,500 ($1,250 for Married Filing Separate Returns) over the threshold personal exemption gets reduced by 2% ($81).

Standard Deduction Amount

For year 2016 standard deduction amounts are:

  • Married Filing Joint Return           $12,600
  • Married Filing Separate Returns                $6,300
  • Single                                                    $6,300
  • Head of Household                         $9,300

Additional standard deduction amount for aged or blind:

  • Married Filing Joint Return           $1,250
  • Married Filing Separate Returns                $1,250
  • Single                                                    $1,550
  • Head of Household                         $1,550

 

Estate Tax Exclusion Amount

The basic exclusion amount for determining the amount of the unified credit against estate tax has been updated to $5,450,000

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