On October 25, 2016 the IRS announced the inflation adjustments that affect tax brackets, personal exemptions, standard deductions, the AMT and many other items. Most amounts increased by about 0.7%. However, since most automatic adjustments are rounded to the nearest $50, $100, $500 or $1000, the exact percentage change will vary from item to item. (The exact, un-rounded amounts, however, do remain in the background and will be used as the starting points for making all the inflation adjustments next year.)
For 2017 the standard deduction will be $6,350 (single) or $12,700 (joint). The additional standard deduction of $1,250 or $1,550 for over 65 or blind is unchanged. The personal exemption amount will be the same $4,050 as it is in 2016.
The estate tax exclusion of decedents who die during 2017 increases to $5,490,000, up from $5,450,000 for estates of decedents who died in 2016. One item that did not increase is the annual gift tax exemption, remaining at $14,000 for the fifth year in a row. The gift tax exemption is subject to automatic inflation adjustments, but it isn't increased until the cumulative adjustments are $1,000. Accordingly, at the current rate of inflation (about 1%) this particular exclusion will increase by $1,000 about once every six or seven years.
The tax rate brackets that will be in effect for 2017 are contained in Rev Proc 2016-55, which also contains all the other inflation adjusted rates, deductions, exemptions, credits, phase-out levels, etc. for the year 2017. Here's a link:
Keep in mind that this information all pertains to the tax year 2017 ... i.e. for tax returns that will be filed in 2018 ... and it will be useful for those wishing to do tax planning for themselves and their clients for the upcoming year.
For 2017 the standard deduction will be $6,350 (single) or $12,700 (joint). The additional standard deduction of $1,250 or $1,550 for over 65 or blind is unchanged. The personal exemption amount will be the same $4,050 as it is in 2016.
The estate tax exclusion of decedents who die during 2017 increases to $5,490,000, up from $5,450,000 for estates of decedents who died in 2016. One item that did not increase is the annual gift tax exemption, remaining at $14,000 for the fifth year in a row. The gift tax exemption is subject to automatic inflation adjustments, but it isn't increased until the cumulative adjustments are $1,000. Accordingly, at the current rate of inflation (about 1%) this particular exclusion will increase by $1,000 about once every six or seven years.
The tax rate brackets that will be in effect for 2017 are contained in Rev Proc 2016-55, which also contains all the other inflation adjusted rates, deductions, exemptions, credits, phase-out levels, etc. for the year 2017. Here's a link:
Keep in mind that this information all pertains to the tax year 2017 ... i.e. for tax returns that will be filed in 2018 ... and it will be useful for those wishing to do tax planning for themselves and their clients for the upcoming year.