Inflation-adjusted tax brackets are anticipated to go up a bit next year, according to a pair of new reports, but that could reduce the tax burden for many taxpayers.

According to one report, from Thomson Reuters, the basic standard deduction for heads of household, the additional deduction, and the exemption amounts, will increase to $4,050. The starting point for phasing out taxpayers’ personal exemptions is expected to range from $313,800 for spouses filing jointly and surviving spouses, and $287,650 for heads of household, to $261,500 for single taxpayers. Similar higher dollar thresholds are expected to apply to the phaseout of itemized deductions.

In contrast, this year, phaseouts began at $311,300 of adjusted gross income for joint filers, $285,350 for heads of household, and $259,400 for singles. The higher phaseout levels prevent inflation from eating into the value of these deductions.

The other report, from Bloomberg BNA, predicts the top 39.6 percent tax bracket will begin at $470,700 for married taxpayers filing joint returns and at $418,400 for unmarried individuals. This represents an increase from $466,950 and $415,050, respectively in 2016.

[IMGCAP(1)]

[IMGCAP(2)]

Bloomberg BNA predicts that in 2017, the personal exemption amount will stay unchanged from 2016 at $4,050. It is phased out for high-income taxpayers. When calculating deductions, taxpayers can decide to take the higher of their itemized deductions or the standard deduction. The standard deduction amount will differ, depending on the taxpayer’s filing status. The standard deduction amounts for 2017 are projected to increase slightly from 2016.

Standard Deduction

[IMGCAP(3)]

Alternative Minimum Tax

For some taxpayers, inflation adjustments will influence whether they need to pay the alternative minimum tax or not. The projected AMT exemptions for 2017 are as follows:

[IMGCAP(4)]

Estate and Gift Tax Exclusions

Bloomberg BNA anticipates the estate tax basic exclusion for people who die next year will be $5.49 million.

The exclusion amount was $5.45 million this year. The annual gift tax exclusion will still be $14,000 in 2017.

Tax Preparer Penalties

Bloomberg BNA also has predictions for tax preparer penalty amounts, adjusted for inflation next year:

[IMGCAP(5)]

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access