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2015 Inflation-Adjusted Tax Amounts Released

12.09.2014

2015_tax_1040_tax seasonThe IRS has released its list of 2015 inflation-adjusted tax amounts, based on recent CPI-U indices that have only recently been finalized. The Tax Code requires that federal income tax brackets and certain other figures be adjusted annually for inflation. Despite a low rate of inflation during 2014, many provisions will increase for 2015. Some, however, remain the same due to rounding conventions.

Official 2015 amounts

Rate bracket amounts. All filers will see an inflation-adjusted rise in each of their tax brackets. For 2015, bracket adjustments are made for all brackets: 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. The top 39.6% tax bracket, for example, will start at $464,850 for married joint filers (up from $457,600); $439,000 for heads of household (up from $432,200); $413,200 for unmarried filers (up from $406,750); and $232,425 for married separate filers (up from $228,800).

Among more than 40 other 2015 inflation-adjusted amounts released by the IRS are the following:

Personal exemptions. Personal and dependency exemptions will increase from $3,950 in 2014 to $4,000 for 2015.

Standard deductions. Standard deductions will increase for 2015 to $12,600 for married joint filers (up from $12,400 for 2014) and $6,300 for single filers and married separate filers (up from $6,200 for 2014). For heads of household, the standard deduction will be $9,250 (up from $9,100 for 2014).

Limitation on itemized deductions. For 2015, the amount of itemized deductions that can be claimed will begin to phase out for certain taxpayers whose income exceeds $309,900 (married joint filers); $284,050 (heads of household); $258,250 (single filers); or $154,950 (married separate filers).

Kiddie tax. For purposes of determining whether a child's unearned income is taxed at the parent's tax rate, the amount by which the child's net unearned income escapes the kiddie tax increases tax for 2015 to $1,050. The child's income can be reported on the parent's return if the child's gross income is more than $1,050, and less than $10,500. The exemption amount for purposes of the alternative minimum tax cannot exceed the sum of the child's earned income for the tax year, plus $7,400.

Estate and gift tax. The gift tax annual exemption will remain the same for 2015, at $14,000. However, the estate and gift tax applicable exclusion will increase from $5,340,000 for 2014 to $5,430,000.

For 2015, recipients of gifts from certain foreign persons must report these gifts if the aggregate value of gifts received during the tax year exceeds $15,601.

AMT exemption amounts. For 2015, the alternative minimum tax (AMT) exemption for married joint filers and surviving spouses will be $83,400 (up from $82,100 for 2014). For heads of household and unmarried single filers, the exemption will be $53,600 (up from $52,800 for 2014). For married separate filers, the amount will be $41,700 (up from $41,050 for 2014).

Qualified transportation fringe benefits. Absent action from Congress to extend parity between transit and parking benefits beyond the 2013 tax year, the 2015 monthly cap on the exclusion for transit passes and for commuter highway vehicles will be $130. The monthly cap on qualified parking benefits will be $250.

Hemmann_Darla (3)For more information, contact your Brown Smith Wallace tax advisor, or Darla Hemmann at 314.983.1203 or dhemmann@bswllc.com.

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