The Internal Revenue Service announced that annual inflation adjustments will affect more than 50 tax provisions, including the tax rate schedules, and will result in tax benefits to increase slightly in 2017. Here are some highlights of the changes:
- The standard deduction for married filing jointly rises to $12,700 for tax year 2017, up $100 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $6,350 in 2017, up from $6,300 in 2016. For heads of households, the standard deduction will be $9,350 for tax year 2017, up from $9,300 for tax year 2016.
- The personal exemption for tax year 2017 remains $4,050. The exemption is subject to a phase-out that begins with adjusted gross income of $261,500 ($313,800 for married couples filing jointly). It phases out completely at $384,000 ($436,300 for married couples filing jointly).
- For tax year 2017, the 39.6 percent rate affects single taxpayers whose income exceeds $418,400 ($470,700 for married taxpayers filing jointly), up from $415,050 and $466,950, respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds for tax year 2017 are described in the Revenue Procedure 2016-55.
- The limitation for itemized deductions to be claimed on tax year 2017 returns of individuals begins with incomes of $287,650 or more ($313,800 for married couples filing jointly).
- The Alternative Minimum Tax exemption amount for tax year 2017 is $54,300 and begins to phase out at $120,700 ($84,500, for married couples filing jointly for whom the exemption begins to phase out at $160,900). The 2016 exemption amount was $53,900 ($83,800 for married couples filing jointly). For tax year 2017, the 28 percent rate applies to taxpayers with taxable incomes above $187,800 ($93,900 for married individuals filing separately).
- The tax year 2017 maximum Earned Income Tax Credit is $6,318 for taxpayers filing jointly who have three or more qualifying children, up from a total of $6,269 for tax year 2016. (The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phase-outs).
- For tax year 2017, the monthly limitation for the qualified transportation fringe benefit is $255, as is the monthly limitation for qualified parking.
- For calendar 2017, the dollar amount used to determine the penalty for not maintaining minimum essential health coverage is $695.
- For tax year 2017, the Lifetime Learning Education Credit begins to phase out at an AGI of $112,000, up from $111,000 for tax year 2016.
- Estates of decedents who die during 2017 have a basic exclusion amount of $5.49 million, up from $5.45 million for estates of decedents who died in 2016.
If you have questions about any of the upcoming changes for 2017, your local Dallas CPA Firm is always there to help and make sure that you are getting all of the deductions you deserve!
