2017 Tax Brackets, Standard Deduction and other Tax Updates

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The IRS has published the latest 2017 tax figures (for filing taxes in 2018) reflecting minor COLA updates to federal thresholds. You can see 2016 and past tax tables here.

  • No changes to tax rates with 39.6% being the highest marginal tax rate. Tax bracket income thresholds increase marginally in line with inflation. The effect of this (bracket creep) is that people with no income increases in 2017 will actually see a lower marginal tax rate when filing in 2018. This is because more of your income is taxed in the lower brackets. For example, all other things being equal, a married couple with taxable income of $100,000 should expect to pay $192 less in income taxes in 2017 thanks to inflation adjusted tax brackets.

    2017 Federal Tax Rates and Marginal Tax Brackets

    Tax RateSingleMarried Filing JointlyMarried Filing SeparateHead of Household
    10%$0 – $9,325$0 - $18,650$0–$9,325$0-$13,350
    15%$9,326 – $37,950$18,651 - $75,900$9,376–$37,950$13,351-$50,800
    25%$37,951 - $91,900$75,901 - $153,100$37,951-$76,550$50,801-$131,200
    28%$91,901 – $191,650$153,101 - $233,350$76,551-$116,675$131,201-$212,500
    33%$190,651 - $416,700$233,351 - $416,700$116,676-$208,350$212,501-$416,700
    35%$416,701 - $418,400$416,701 - $470,700$208,351-$235,350$416,701-$444,550
    39.6%over $418,400over $470,700over $235,350over $444,550
    Personal Exemption$4,050$4,050$4,050$4,050
    Std Deduction$6,350$12,700$6,350$9,350
  • The standard deduction rises by $50 for heads of household, single and married filling separate filers. Married couples filing jointly’s standard deduction rises by $100 over 2016 levels. More than 60% of taxpayers will benefit from the higher standard deduction because they don’t have enough deductions to justify itemizing.
  • The personal exemption stayed flat and did not rise for any filing group type.
  • The Alternative Minimum Tax (AMT) exemption rose marginally in line with inflation. See more on AMT changes here.
  • The maximum Earned Income Tax Credit thresholds will increased moderately relative to other tax credits given the number of low income people that depend on this. See the latest EIC tables,
  • The gift tax exclusion will remain at $14,000
  • Health Flexible spending arrangements (FSA) employee contribution limits will rise by $50 to $2,600 as mandated under the Affordable Care Act. The health FSA pre-tax deduction limit is per employee, per employer per plan year.
  • Foreign earned income exclusion increased by $800 to $102,100.

The above tax rates are pretty much set but with Donald Trump elected as President we could see changes if he is able to undertake various elements of his economic stimulus and tax reform package. I’ll post any updates should they arise.

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