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2016 Tax Brackets: A Complete Guide

December 22, 2015

Pay attention to a few changes regarding your taxes for 2016. There are changes regarding mileage rates, personal exemptions, and estate taxes.

The IRS adjusts dollar limitations on benefits, contributions, and other employee benefit plan limits each year based on inflation.

So what exactly has changed for 2016?

Most amounts have not changed for this year, but you will note a few adjustments in certain areas.

Important Tax Figures for 2016
Social Security/Medicare 2016 2015
Social Security Tax Wage Base $118,500 $118,500
Medicare Tax Wage Base No limit No limit
Employee portion of Social Security 6.2% 6.2%
Individual Retirement Accounts 2016 2015
Roth IRA Individual, up to 100% of earned income $5,500 $5,500
Traditional IRA Individual, up to 100% of earned Income $5,500 $5,500
Roth and traditional IRA additional annual "catch-up" contributions for account owners age 50 and older $1,000 $1,000
Qualified Plan Limits 2016 2015
Defined Contribution Plan limit on additions on Sections 415(c)(1)(A) $53,000 $53,000
Defined Benefit Plan limit on benefits (Section 415(b)(1)(A)) $210,000 $210,000
Maximum compensation used to determine contributions $265,000 $265,000
401(k), SARSEP, 403(b) Deferrals (Section 402(g)), & 457 deferrals (Section 457(b)(2)) $18,000 $18,000
401(k), 403(b), 457 & SARSEP additional "catch-up" contributions for employees age 50 and older $6,000 $6,000
SIMPLE deferrals (Section 408(p)(2)(A)) $12,500 $12,500
SIMPLE additional "catch-up" contributions for employees age 50 and older $3,000 $3,000
Compensation defining highly compensated employee (Section 414(q)(1)(B)) $120,000 $120,000
Compensation defining key employee (officer) $170,000 $170,000
Compensation triggering Simplified Employee Pension contribution requirement (Section 408(k)(2)(c)) $600 $600
Driving Deductions 2016 2015
Business mileage, per mile 54 cents 57.5 cents
Charitable mileage, per mile 14 cents 14 cents
Medical and moving, per mile 19 cents 23 cents
Business Equipment 2016 2015
Maximum Section 179 deduction $500,000 $500,000
Phaseout for Section 179 $2,000,000 $2,000,000
Transportation Fringe Benefit Exclusion 2016 2015
Monthly commuter highway vehicle and transit pass $255 $255
Monthly qualified parking $255 $250
Standard Deduction 2016 2015
Married filing jointly $12,600 $12,600
Single (and married filing separately) $6,300 $6,300
Heads of Household $9,300 $9,250
Personal Exemption 2016 2015
Amount $4,500 $4,000
Personal Exemption Phaseout 2016 2015
Married filing jointly and surviving spouses Begins at $311,300 Begins at $309,900
Heads of Household Begins at $285,350 Begins at $284,050
Unmarried individuals Begins at $259,400 Begins at $258,250
Married filing separately Begins at $155,650 Begins at $154,950
Domestic Employees 2016 2015
Threshold when a domestic employer must withhold and pay FICA for babysitters, house cleaners, etc. $1,900 $1,900
Kiddie Tax 2016 2015
Net unearned income not subject to the "Kiddie Tax" $2,100 $2,100
Estate Tax 2016 2015
Federal estate tax exemption $5.45 million $5.43 million
Maximum estate tax rate 40% 40%
Annual Gift Exclusion 2016 2015
Amount you can give each recipient $14,000 $14,000

Questions? Contact any member of our Tax Services Team.

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