One Accountants Predictions For 2017 Taxes
One Accountants Predictions For 2017 Taxes Rates, Brackets & Deduction Amounts Look Like Mostly Good News
Accountants report that the consumer price index (CPI) has increased by .2% for the month of August. The CPI measures the cost of goods and services – basically, your cost of living. When the CPI doesn’t change much, it tends to signal that interest rates will stay put. This is important for taxpayers because the Tax Code provides for mandatory annual adjustments to certain tax items based on inflation.
Accountants note that the tax items subject to mandatory annual adjustments, federal income tax brackets tend to get the most attention since they have been subject to adjustment for nearly 30 years. However, inflation adjustments are now routinely included in new tax legislation – including penalties – which can be confusing for taxpayers. Luckily, there are accountants out there who can sort it all out for you.
Accountants released their predictions for the coming tax year, and they anticipate that taxpayers will find a little bit of relief in 2017. According to accountants, many individuals and businesses can look forward to potentially lower tax liability because of higher deductions and credits. These adjustments also ensure that taxpayers won’t lose out on tax breaks just because of inflation.
How does that translate into real life dollars? Follows are some of the projected numbers for the tax year 2017 (the tax year beginning January 1, 2017). These are NOT the tax rates and other numbers for 2016. For a refresher on the official 2016 tax rates, click here.
The slightly higher annual CPI means that brackets will nudge upward. Together with increases in the standard deduction amounts, taxes should decrease for some taxpayers, including high-income taxpayers. Here are what the rates are expected to look like:
For 2017, the personal exemption amount is projected to stay put at $4,050, the same as in 2016.
The amount of the standard deduction is projected to edge up slightly in 2017. About 2/3 of all taxpayers will file using the standard deduction: those taxpayers who have more in itemized deductions than the standard deduction amount will file a Schedule A. Here are the projected standard deduction amounts for 2017:
The additional standard deduction amount for the aged or the blind is expected to remain at $1,250 for 2017. Similarly, the additional standard deduction amount is expected to remain at $1,550 if the individual is also unmarried and not a surviving spouse.
The boost in the standard deduction amount also means that filing thresholds will be bumped a little. For most taxpayers, the quick “cheat sheet” formula is this: find your standard deduction and add your personal exemption to that number (remember to consider the additional standard deduction noted above). That means, for example, for a single person under the age of 65 who is not blind, the filing threshold for 2017 should be $10,400. For comparison, you can find the 2016 numbers here.
For those taxpayers who itemize their deductions, the Pease limitations, named after former Rep. Don Pease (D-OH) may cap or phase out certain deductions for high-income taxpayers. The Pease thresholds for 2017 are projected to be:
Pease limitations apply to charitable donations, the home mortgage interest deduction, state and local tax deductions and miscellaneous itemized deductions. They do not apply to medical expenses, investment expenses, gambling losses and certain theft and casualty losses.
Alternative Minimum Tax (AMT)
Instead of the “band-aid” treatment for taxpayers, the AMT exemption rate is now permanently subject to inflation. Accountants anticipate that the exemption amounts will look like this in 2017:
Federal Estate Tax Exclusion
The federal estate tax exclusion for decedents dying in 2016 was $5.45 million each or, with portability, $10.9 million per married couple. Accountants project this amount will edge up to $5.49 million per person in 2017, making the total for a married couple a whopping $10.98 million.
Gift Tax Exclusion
Nothing to see here, folks: once again, the annual exclusion for federal gift tax purposes is projected to remain at $14,000 in 2017 (same as in 2014, 2015 and 2016).
Remember that these are just projections (granted, educated projections based off IRS sites). The Internal Revenue Service (IRS) will publish the official tax brackets and other tax numbers for 2017 later this year. It typically happens in October, so be sure to check back.