2017 inflation adjustments for income tax and estate tax released
Recently, the Internal Revenue Service released Rev. Proc. 2016-55 outlining the 2017 inflationary adjustments. These adjustments affect various income tax rate thresholds and the estate and gift tax exemption.
Some highlights of the new income tax rates and deductions are as follows:
| INCOME TAX | 2016 | 2017 |
|---|---|---|
| Standard Deduction |
6,300 Single 12,600 Married Filing Jointly (MFJ) |
6,350 Single 12,700 MFJ |
| Personal Exemption | 4,050 | 4,050 |
| AMT Exemption |
53,900 Single 83,800 MFJ |
54,300 Single 84,500 MFJ |
| Adoption Credit | Up to 13,460 | Up to 13,570 |
| Max Earned Income Credit | 6,269 MFJ w/3+ children | 6,318 MFJ w/3+ children |
| TAX RATES | ||
| 10% |
<9,275 Single <18,550 MFJ |
<9,325 Single <18,650 MFJ |
| 15% |
9,275 Single 18,550 MFJ |
9,325 Single 18,650 MFJ |
| 25% |
37,650 Single 75,300 MFJ |
37,950 Single 75,900 MFJ |
| 28% |
91,150 Single 151,900 MFJ |
131,200 Single 153,100 MFJ |
| 33% |
190,150 Single 231,450 MFJ |
212,500 Single 233,350 MFJ |
| 35% |
413,350 Single 413,350 MFJ |
416,700 Single 416,700 MFJ |
| 39.6% |
415,050 Single 466,950 MFJ |
444,450 Single 470,700 MFJ |
The exemption from the kiddie tax in 2017 remains the same as 2016 at $2,100. If a child's income is more than $1,050 and less than $10,500, a parent can include the child's income on the parents' return.
The estate and gift tax rates are also affected. Currently, an individual may give away during life and at death an amount equal to $5.45 million. In 2017, the amount will rise to $5.49 million, effectively shielding $10.98 million for a married couple.
The annual gift tax exclusion will remain at $14,000, as it has been for the last several years. The amount that may be gifted to a non-citizen spouse is raised in 2017 to $149,000, up from $148,000.
