Tax Brackets, Deductions, and Exemptions for 2017
More than 50 tax provisions, including the tax rate schedules and other tax changes are adjusted for inflation in 2017. Let’s take a look at the ones most likely to affect taxpayers like you.
The tax rate of 39.6 percent affects singles whose income exceeds $418,400 ($470,700 for married taxpayers filing a joint return), up from $415,050 and $466,950, respectively. The other marginal rates–10, 15, 25, 28, 33 and 35 percent–and related taxable income thresholds–are found in Revenue Procedure 2016-55 at https://www.irs.gov/pub/irs-drop/rp-16-55.pdf.
The standard deduction increases to $6,350 for singles and married persons filing separate returns and $12,700 for married couples filing jointly. The standard deduction for heads of household rises to $9,350, up from $9,300 in 2016.
The overall limitation on itemized deductions for 2017 returns of single individuals applies beginning with incomes of $261,500 ($313,800 for married couples filing jointly and surviving spouses).
The personal exemption for tax year 2017, remains at $4,050. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $261,500 ($313,800 for married couples filing jointly). It phases out completely at $384,000 ($436,300 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 tax rate applies to taxpayers with taxable incomes above $187,800 ($93,900 for married individuals filing separately).
For 2017, the maximum earned income credit amount is $6,318 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,269 for tax year 2016.
Estates of decedents who die during 2017, have a basic exclusion amount of $5,490,000, up from a total of $5,450,000 for estates of decedents who died in 2016.
For 2017, the exclusion from tax on a gift to a spouse who is not a U.S. citizen is $149,000, up from $148,000 for 2016.
For tax year 2017, the foreign earned income exclusion is $102,100, up from $101,300 for tax year 2016.
The annual exclusion for gifts remains at $14,000 for 2017.
The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) increases to $2,600 up from $2,550 in 2016.
Under the small business health care tax credit, the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $26,200 for tax year 2017, up from $25,900 for 2016.
Need help with tax planning in 2017? We’re just a phone call away!