Tax Tip of the Week | No. 322 | Inflation Adjusted 2016 Income Tax Rates

Tax Tip of the Week | September 30, 2015 | No. 322 | Inflation Adjusted 2016 Income Tax Rates

Thomson Reuters is forecasting the tax rates for next year and predicting they will be adjusted upward in line with modest inflation.The report, Projected 2016 Inflation-Adjusted Tax Brackets and Other Key Figures, demonstrates that, despite modest inflation in the past year, tax brackets will be adjusted upward in 2016, easing the tax burden slightly for many taxpayers. The adjustments prevent the loss of tax benefits due solely to inflation.The report provides a detailed projection of inflation-adjusted income tax brackets, standard deduction and exemption amounts, and many other tax items for 2016 to equip professionals, their clients, and compliance software developers with information needed for tax planning and preparation.According to the report, the minimum gross income thresholds for filing in 2016 have increased a bit. They are based on the basic standard deduction, which increases for heads of household, the additional deduction, and the exemption amounts, which will increase to $4,050. Also notable is the starting point for the phasing out of taxpayers’ personal exemptions, ranging from $311,300 for spouses filing jointly/surviving spouses and $285,350 for heads of household to $259,400 for single taxpayers.The same higher dollar thresholds will apply to the phase out of itemized deductions. That’s compared to this year, when phase outs began at $309,900 of adjusted gross income for joint filers, $284,050 for heads of household, and $258,250 for singles. The higher phase out levels prevent inflation from eating into the value of these deductions.The report is based on calculations derived from the most recent Consumer Price Index data published by the Bureau of LaborYou can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.Rick Prewitt – the guy behind TTW...until next week.