A first look at 2017 inflation-adjusted tax amounts now available

An early glimpse at the income tax picture for 2017 is now available. The new information includes estimated ranges for each 2017 tax bracket as well as projections for a growing number of inflation-sensitive tax figures, such as the tax rate brackets, personal exemption and the standard deduction. Projections – made available by Wolters Kluwer Tax & Accounting US – are based on the relevant inflation data recently released by the U.S. Department of Labor. The IRS is expected to release the official figures by early November. Here are a few of the more widely-applicable projected amounts:

Tax Brackets

For 2017, for married taxpayers filing jointly and surviving spouses, the maximum taxable income for the:

  • 10-percent bracket is $18,650, (up from $18,550 for 2016);
  • 15-percent tax bracket, $75,900 (up from $75,300 for 2016);
  • 25-percent tax bracket, $153,100 (up from $151,900 for 2016);
  • 28-percent tax bracket, $233,350 (up from $231,450 for 2016);
  • 33-percent tax bracket, $416,700 (up from $413,350 for 2016);
  • 35-percent tax bracket, $470,700 (up from $466,950 for 2016); and
  • 6 percent for all taxable income above that 35-percent bracket’s maximum income level.

For heads of household, the maximum taxable income for the:

  • 10-percent bracket is $13,350 (up from $13,250 for 2016);
  • 15-percent tax bracket, $50,800 (up from $50,400 for 2016);
  • 25-percent tax bracket, $131,201 (up from $130,150 for 2016);
  • 28-percent tax bracket, $212,500 (up from $210,800 for 2016);
  • 33-percent tax bracket, $416,700 (up from $413,350 for 2016);
  • 35-percent tax bracket, $446,700 (up from $441,000 for 2016);
  • 6 percent for all taxable income above that 35-percent bracket’s maximum income level.

For unmarried, single filers who are not heads of household or surviving spouses, the maximum taxable income for the:

  • 10-percent bracket is $9,325 (up from $9,275 for 2016);
  • 15-percent tax bracket, $37,950 (up from $37,650 for 2016);
  • 25-percent tax bracket, $91,900 (up from $91,150 for 2016);
  • 28-percent tax bracket, $191,650 (up from $190,150 for 2016);
  • 33-percent tax bracket, $416,700 (up from $413,350 for 2016);
  • 35-percent tax bracket, $418,400 (up from $415,050 for 2016); and
  • 6 percent for all taxable income above that 35-percent bracket’s maximum income level.

For married taxpayers filing separately, the maximum taxable income for the:

  • 10-percent bracket is $9,325 (up from $9,275 for 2016);
  • 15-percent tax bracket, $37,950 (up from $37,650 for 2016);
  • 25-percent tax bracket, $76,550 (up from $75,950 for 2016);
  • 28-percent tax bracket, $116,675 (up from $115,725 for 2016);
  • 33-percent tax bracket, $208,350 (up from $206,675 for 2016);
  • 35-percent tax bracket, $235,350 (up from $233,475 for 2016); and
  • 6 percent for all taxable income above that 35-percent bracket’s maximum income level.

Standard Deduction

The 2017 standard deduction will rise $50, to $6,350 for single taxpayers. For married joint filers, the standard deduction will rise $100, to $12,700. For heads of household, the standard deduction will rise to $9,350, up from $9,300 for 2016. The additional standard deduction for blind and aged married taxpayers will remain at $1,250. For unmarried taxpayers who are blind or aged, the amount of the additional standard deduction will also remain the same ($1,550).

For 2017 the so-called “kiddie” deduction used on the returns of children claimed as dependents on their parents’ returns remains $1,050 or $350 plus the individual’s earned income.

Personal Exemptions

The personal exemption will be $4,050 for 2017, the same as for 2016. The phaseout of the personal exemption for higher-income taxpayers will begin after taxpayers pass the same income thresholds set forth for the limitation on itemized deductions.

Limitation on Itemized Deductions

For higher-income taxpayers who itemize their deductions, the limitation on itemized deductions will be imposed as follows:

  • For married couples filing joint returns or surviving spouses, the income threshold will begin to phase out at income over $313,800, up from $311,300 for 2016.
  • For heads of household, the beginning threshold will be $287,650 in 2016, up from $285,350 for 2016.
  • For single taxpayers, the beginning threshold will be $261,500, up from $259,400 for 2016.
  • For married taxpayers filing separate returns, the 2016 threshold will be $156,900, up from $155,650 for 2016.

Estate and Gift Tax

Gift Tax. The 2017 gift tax annual exemption will remain the same as for 2016, at $14,000.

Estate Tax. The estate and gift tax applicable exclusion will increase from $5,450,000 in 2016 to $5,490,000 in 2017.

Gifts to Noncitizen Spouses. The first $149,000 of gifts made in 2017 to a spouse who is not a U.S. citizen will not be included in taxable gifts, up $1,000 from $148,000 for 2016.

AMT Exemptions

The American Taxpayer Relief Act of 2012 provided for the annual inflation adjustment of the exemption from alternative minimum tax (AMT) income. Previously, this inflation adjustment had to be enacted by Congress each year. For 2017, the AMT exemption for married joint filers and surviving spouses is projected to be $84,500 (up from $83,800 for 2016). For heads of household and unmarried single filers, the exemption will be $54,300 (up from $53,900 for 2016). For married separate filers, the exemption will be $42,250 (up from $41,900 for 2016).

Written by

Steve Moss, CPA is a partner at Holden Moss CPAs and loves helping businesses and their owners grow to be the very best they can be. Our other offices include Raleigh, Oxford and Warrenton. We are a little different at Holden Moss CPAs. While we still provide traditional tax and accounting services, years ago we realized many clients wanted help in running their businesses and were hungry for ideas, solutions, strategy, and execution. In response, we expanded our skill set and joined Ran One, a global network of business consulting firms. Our membership with Ran One gives us access to proprietary resources and analytical software to help our clients grow, become more profitable and valuable, and have the lifestyle they desire. Now, blended into the fabric of our normal tax and accounting needs, we are focused on our clients’ businesses in a very different way. While our approach is not right for everyone, for those whom it is, incredible results may be obtained. Whether you have a new, or established, business, or for those in transition of selling or retiring, or for those who simply need to develop an exit strategy or succession plan, our unique approach to client service may be the edge you need.

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