IRS Announces 2015 Tax Changes
IRS Announces 2015 Tax Changes – Although the Federal Reserve predicts that inflation will be under two percent again in 2015, the IRS has modified certain tax rates and ceiling amounts to cover the anticipated increase. While none of the changes seem particularly significant, any or all of these can become important to an individual taxpayer or a business that is bumping up on one of the interval markers. The new list of 2015 inflation adjustments was released just a few days ago, on October 30, 2014.
Some of the 2015 IRS inflation adjustments are highlighted below:
- Standard Deduction
The standard deduction will increase to $6,300 for single taxpayers and $12,600 for married couples filing jointly (up from $6,200 and $12,400, respectively).
- Personal Exemption
The personal exemption will increase to $4,000 from $3,950. However, the personal exemption will begin to phase out for individuals with adjusted gross incomes in excess of $258,250.
- Alternative Minimum Tax Exemption
The Alternative Minimum Tax exemption will increase to $53,600 for single taxpayers and $83,400 for married couples filing jointly (up from $52,800 and $82,100, respectively).
- Minimum Income for 39.6% Tax Rate
The maximum tax rate of 39.6% will be applied to any single taxpayers whose income exceeds $413,200 and any married couple filing a joint return whose income exceeds $464,850. These amounts are up from $406,750 and $457,600 in 2014.
- Minimum Income for Limitation on Itemized Deductions
Limitations will be imposed on itemized deductions for single taxpayers with adjusted gross incomes in excess of $258,250 and married couples filing jointly with combined adjusted gross incomes in excess of $309,900. These income limits are up from $254,200 and $305,050 in 2014.
- Maximum Earned Income Credit
The maximum earned income credit for a married couple filing jointly with three or more dependent children increases to $6,242 (up from $6,143 in 2014). Increases for other categories and income amounts can be found in IRS Revenue Procedure 2014-61.
- Basic Exclusion for Estates
The basic estate exclusion increases to $5,430,000 (up from $5,340,000 in 2014).
- Foreign Earned Income Exclusion
The foreign earned income exclusion increases to $100,800 (up from $99,200 in 2014).
- Limit on Employee Contributions to Healthcare Spending Accounts
The maximum allowable contribution to an employer sponsored healthcare flexible spending account increases to $2,550 (up from $2,500 in 2014).
Although these increases are relatively small in response the low rate of inflation that is projected to continue into 2015, they should nevertheless be considered as one factor in an effective tax planning strategy. Ignoring any changes to the tax code could potentially result in tax payments that are higher than would otherwise be necessary.
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