01.29.2016 | Resources & News

IRS and Social Security Administration Release – 2016 Income and Transfer Tax Adjustments

By Brian Gaudet
IRS and Social Security Administration Release – 2016 Income and Transfer Tax Adjustments

The IRS and the Social Security Administration have released their 2016 list of CPI-adjusted items that will affect individual income, payroll, self-employment and transfer tax calculations for 2016. We have provided you with some of the key provisions in the following grids.

 

INCOME TAXES

Threshold amounts above which the top regular and alternative minimum tax (AMT) rates apply.

2016 2015
39.6% bracket threshold: Taxable income above: Taxable income above:
Joint returns / surviving spouses $466,950 $464,850
Heads of household $441,000 $439,000
Other unmarried individuals $415,050 $413,200
Married filing separately $233,475 $232,425
Estates and Trusts $12,400 $12,300
AMT 28% bracket threshold: AMTI above: AMTI above:
Joint returns / surviving spouses $186,300 $185,400
Other unmarried individuals $186,300 $185,400
Married filing separately $93,150 $92,700
Estates and Trusts $186,300 $185,400

Personal exemption, standard deduction and foreign income exclusion amounts:

2016 2015
Personal exemption amount $4,050 $4,000
Personal exemption phased-out: Beginning/ending at AGI of: Beginning/ending at AGI of:
Joint returns / surviving spouses $311,300 / $433,800 $309,900 / $432,400
Heads of households $285,350 / $407,850 $284,050 / $406,550
Other unmarried individuals $259,400 / $381,900 $258,250 / $380,750
Married filing separately $155,650 / $216,900 $154,950 / $216,200
Standard deduction:    
Joint returns / surviving spouses $12,600 $12,600
Heads of households $9,300 $9,250
Other unmarried individuals $6,300 $6,300
Married filing separately $6,300 $6,300
Foreign income exclusion amount $101,300 $100,800

AMT exemption amounts and the AMT exemption phase-out amounts:

AMT exemption amounts:    
Joint returns / surviving spouses $83,800 $83,400
Unmarried individuals $53,900 $53,600
Married filing separately $41,900 $41,700
Estates and Trusts $23,900 $23,800
AMT exemption phased-out:
Joint returns / surviving spouses $159,700 $158,900
Other unmarried individuals $119,700 $119,200
Married filing separately $79,850 $79,450
Estates and Trusts $79,850 $79,450

 

EMPLOYMENT TAXES

Employment taxes imposed on wage earners:

2016 2015
Social Security tax wage base:
Wage ceiling amount $118,500 $118,500
Maximum tax (rate = 6.2%) $7,347.00 $7,347.00
1.45% Medicare tax wage bracket:
Joint filers First $250,000 of wages First $250,000 of wages
Married separate taxpayers First $125,000 of wages First $125,000 of wages
Other wage-earners First $200,000 of wages First $200,000 of wages
2.35% Medicare tax wage bracket:
Joint filers Wages above $250,000 Wages above $250,000
Married separate taxpayers Wages above $125,000 Wages above $125,000
Other wage-earners Wages above $200,000 Wages above $200,000

Employment taxes imposed on self-employment (SE) income:

2016 2015
Social Security tax wage base:
SE income ceiling amount $118,500 $118,500
Maximum tax (rate = 12.4%) $14,694.00 $14,694.00
2.9% Medicare tax wage bracket:
Joint filers First $250,000 of SE income First $250,000 of wages
Married separate taxpayers First $125,000 of SE income First $125,000 of wages
Other SE income-earners First $200,000 of SE income First $200,000 of wages
3.8% Medicare tax wage bracket:
Joint filers Wages above $250,000 Wages above $250,000
Married separate taxpayers Wages above $125,000 Wages above $125,000
Other SE income-earners Wages above $200,000 Wages above $200,000

 

TRANSFER TAXES

Estate and gift tax exclusions and valuation limitation:

2016 2015
Basic estate / gift tax exclusion $5,450,000 $5,430,000
Generation-skipping tax exclusion $5,450,000 $5,430,000
Gift tax annual exclusion $14,000 $14,000
For gifts to a non-citizen spouse $148,000 $147,000
Special use value reduction limit $1,110,000 $1,100,000

If you have any questions about this e-alert, please contact Brian Gaudet.

This Alert is provided for information purposes only, and does not constitute legal advice.  According to Mass. SJC Rule 3:07, this material may be considered advertising. ©2016 Posternak Blankstein & Lund LLP. All rights reserved.

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