[September 17, 2015] |
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New Inflation Estimates Offer First Look at Impact for Taxpayers in 2016
An early glimpse at the income tax picture for 2016 is now available
from Wolters Kluwer Tax & Accounting US. The new information includes
estimated ranges for each 2016 tax bracket as well as projections for a
growing number of inflation-sensitive tax figures, such as the personal
exemption and the standard deduction. Projections are based on the
relevant inflation data recently released by the U.S. Department of
Labor.
Inflation Adjustments - Background
Since the late 1980s, the U.S. Tax Code has required that federal income
tax brackets be adjusted for inflation annually, and inflation
adjustments have been inserted into the Internal Revenue Code in recent
years with increasing frequency. For example, the Code now requires over
50 other inflation-driven computations to determine deduction, exemption
and exclusion amounts in addition to the 40 separate computations needed
to inflation-adjust the tax bracket tables each year.
Media Assistance
Expert analysis plus additional details regarding the following
projections and tax topics are available for media members interested in
speaking with federal tax experts at Wolters Kluwer Tax & Accounting US.
For interview requests, please contact Laura Gingiss ([email protected]),
847-267-2213 or Eric Scott ([email protected]),
847-267-2179.
Key Tax Savings, Non-increase Estimates for 2016:
Projections based on the Department of Labor's inflation figures for the
12-month period between August 31, 2014, and August 31, 2015 suggest
most taxpayers will experience modest savings, compared to 2015 tax
filings. For example:
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Because of the income ranges bracketing the marginal tax rates have
increased, a single filer with taxable income of $50,000 should owe
$22.50 less next year due to the adjustments to the income tax rate
brackets between 2015 and 2016.
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A married couple filing jointly with a total taxable income of
$100,000 should pay $45 less income taxes in 2016 than they will on
the same income for 2015 because of indexing of their tax bracket for
2016.
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The dependent standard deduction, used on the returns of individuals
claimed as dependents on another taxpayer's tax return, remains at
$1,050 for 2016.
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The additional standard deduction for those 65-years-old and older or
who are blind will remain at $1,250 for 2016, as will the $1,550
additional amount for single aged 65 or older or blind filers.
Inflation-adjusted Tax Increase Estimates for 2016:
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The personal exemption amount gets bumped up by inflation by $50, to
$4,050 for 2016, up from $4,000 in 2015.
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The standard deduction for single, married filing jointly, and married
filing separately filers is expected to remain the same for 2016. The
standard deduction for heads of household is expected to rise from
$9,250 for 2015 to $9,300 for 2016. Any increase in the standard
deduction, of course, can produce lower taxes by decreasing the
taxpayer's taxable income.
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Wolters Kluwer Tax & Accounting US projects the following for 2016
alternative minimum tax (AMT (News - Alert)) exemptions:
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For married joint filers and surviving spouses, the exemption will
be adjusted upward to $83,800, up from $83,400 for 2015.
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For unmarried single filers and heads of households, the 2016
exemption will be $53,900, up from $53,600 for 2015.
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For married single filers, the exemption will increase to $41,900,
up from $41,700 in 2015.
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The 2016 year represents the third year that the 39.6-percent tax
bracket for higher-income taxpayers, enacted by the American Taxpayer
Relief Act of 2012 (ATRA), will be imposed. For 2016, Wolters Kluwer
projects that the minimum income amounts at which this top tax rate
will kick in will rise to:
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$466,950 (from $464,850) for married joint filers
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$441,000 (from $439,000) for heads of households
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$415,050 (from $413,200) for unmarried filers
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$233,475 (from $232,425) for married separate filers
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These inflation-adjusted amounts also trigger a 20-percent tax on
that portion of taxable income attributable to net capital gains
and qualified dividends that exceed these bracket amounts.
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The estate and gift tax applicable exemption was first set at a $5
million level back in 2011. The amount has been adjusted for inflation
by Congress and is now projected at $5,450,000 for 2016. A spousal
portability election can now effectively protect double that amount
against estate and gift tax ($10,900,000 for 2016).
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The 2016 foreign earned income exclusion will increase to $101,300 for
2016, up from $100,800 for 2015.
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The income phaseout range for married joint filers making Roth IRA
contributions will be $184,000 to $194,000 for 2016, an increase from
$183,000 and $193,000 for 2015.
Wolters Kluwer Tax & Accounting US 2016 Tax
Projections*
As cited earlier, Wolters Kluwer Tax & Accounting US projections for
indexed amounts are based on the relevant inflation data released by the
U.S. Department of Labor. The IRS usually releases official numbers by
December each year.
Tax bracket projections are provided for illustrative purposes only, and
should not be used for income tax returns or other federal income tax
related purposes until confirmed by the IRS later this year.
Married Filing Jointly (& Surviving Spouse)
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Tax Rate
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2016 Taxable Income
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2015 Taxable Income
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10%
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$0 - $18,550
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$0 - $18,450
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15%
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$18,551 - $75,300
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$18,451 - $74,900
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25%
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$75,301 - $151,900
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$74,901 - $151,200
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28%
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$151,901 - $231,450
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$151,201 - $230,450
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33%
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$231,451 - $413,350
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$230,451 - $411,500
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35%
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$413,351 - $466,950
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$411,501 - $464,850
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39.6%
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$466,951+
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$464,851+
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Unmarried Individuals (Other Than Surviving Spouses and Heads of
Households)
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Tax Rate
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2016 Taxable Income
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2015 Taxable Income
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10%
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$0 - $9,275
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$0 - $9,225
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15%
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$9,276 - $37,650
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$9,226 - $37,450
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25%
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$37,651 - $91,150
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$37,451 - $90,750
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28%
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$91,151 - $190,150
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$90,751 - $189,300
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33%
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$190,151 - $413,350
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$189,301 - $411,500
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35%
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$413,351 - $415,050
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$411,501 - $413,200
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39.6%
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$415,051+
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$413,201+
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Head of Household
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Tax Rate
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2016 Taxable Income
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2015 Taxable Income
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10%
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$0 - $13,250
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$0 - $13,150
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15%
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$13,251 - $50,400
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$13,151 - $50,200
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25%
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$50,401 - $130,150
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$50,201 - $129,600
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28%
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$130,151 - $210,800
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$129,601 - $209,850
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33%
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$210,801 - $413,350
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$209,851 - $411,500
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35%
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$413,351 - $441,000
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$411,501 - $439,000
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39.6%
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$441,001+
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$439,001+
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Married Individuals Filing Separate Returns
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Tax Rate
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2016 Taxable Income
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2015 Taxable Income
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10%
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$0 - $9,275
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$0 - $9,225
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15%
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$9,276 - $37,650
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$9,226 - $37,450
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25%
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$37,651 - $75,950
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$37,451 - $75,600
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28%
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$75,951 - $115,725
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$75,601 - $115,225
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33%
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$115,726 - $206,675
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$115,226 - $205,750
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35%
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$206,676 - $233,475
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$205,751 - $232,425
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39.6%
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$233,476+
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$232,426+
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Standard Deduction Amounts
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Filing Status
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2016
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2015
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Increase
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Married Filing Jointly (& Surviving Spouse)
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$12,600
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$12,600
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$0
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Married Filing Separately
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$6,300
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$6,300
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$0
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Single
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$6,300
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$6,300
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$0
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Head of Household
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$9,300
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$9,250
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$50
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Standard Deduction for Dependents ("Kiddie" Standard Deduction)
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2016
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2015
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Increase
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$1,050
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$1,050
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$0
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Personal Exemption Amounts
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2016
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2015
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Increase
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$4,050
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$4,000
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$50
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Gift Tax Exclusion
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2016
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2015
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Increase
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$14,000
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$14,000
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$0
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* These numbers are projected for the 2016 tax year and have not been
confirmed by the Internal Revenue Service (www.irs.org).
About Wolters Kluwer Tax & Accounting US
Wolters Kluwer Tax & Accounting US (CCHGroup.com)
is a leading provider of tax, accounting and audit information, software
and services. It has served tax, accounting and business professionals
since 1913. Among its market-leading solutions are the CCH (News - Alert)® ProSystem fx®
Suite, CCH Axcess™, CCH® IntelliConnect®, CCH®
IntelliConnect Direct, CCH® Accounting Research Manager®
and the U.S. Master Tax Guide®. Wolters Kluwer Tax & Accounting
US is based in Riverwoods, IL. Follow us on Twitter (News - Alert) @WKTAAUS_PR.
Wolters Kluwer Tax & Accounting US is part of Wolters Kluwer (www.wolterskluwer.com),
a market-leading global information services company. Wolters Kluwer had
2014 annual revenues of €3.7 billion ($4.2 billion), employs
approximately 19,000 people worldwide, and maintains operations in over
40 countries across Europe, North America, Asia Pacific, and Latin
America. Wolters Kluwer is headquartered in Alphen aan den Rijn, the
Netherlands. Its shares are listed on NYSE Euronext Amsterdam (WKL), on
Bloomberg (News - Alert) (WKL NA) and are included in the AEX and Euronext 100
indices. Wolters Kluwer has a sponsored Level 1 American Depositary
Receipt program. The ADRs are traded on the over-the-counter market in
the U.S. (WTKWY).
View source version on businesswire.com: http://www.businesswire.com/news/home/20150917006280/en/
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