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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