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Tax Brackets Expected to Rise Next Year

October 27, 2016

Your current inflation-adjusted tax bracket could change slightly for 2017, meaning a potentially less burdensome tax bill.

According to new reports, inflation-adjusted tax brackets are expected to increase slightly for 2017. What does this mean for taxpayers? Well...the higher brackets are expected to reduce the tax burden for many. Here’s an overview of the changes.

Some Highlights

  • According to Bloomberg BNA, the basic standard deduction for heads of household, the additional deduction and the exemption amounts will likely remain $4,050.
  • For personal phase out exemptions, they are expected to range from...
    • $313,800 (increase from 2016- $311,300) for spouses filing jointly as well as surviving spouses;
    • $287,650 for heads of household (up from $285,350); and
    • $261,500 (increase from 2016’s amount--$259,400) for unmarried individuals
  • Bloomberg BNA’s report predicts that...
    • The top 39.6 % tax bracket will begin at $470,700 (up from $466,950) for married taxpayers filing joint returns, and at $418,400 (up from $415,050) for unmarried individuals.

Projected Values (courtesy of Bloomberg BNA)

Married filing jointly and surviving spouses

If Taxable Income Is: The Tax is:
Not Over $18,650 10% of the taxable income
Over $18,650 but not over $75,900 $1,865 plus 15% of excess over $18,650
Over $75,900 but not over $153,100 $10,452.50 plus 25% of excess over $75,900
Over $153,100 but not over $233,350 $29,752.50 plus 28% of excess over $153,100
Over $233,350 but not over $416,700 $52,222.50 plus 33% of excess over $233,350
Over $416,700 but not over $470,700 $112,728 plus 35% of excess over $416,700
Over $470,700 $131,628 plus 39.6% of excess over $470,700

Unmarried individuals (besides Surviving Spouses and Heads of Households)

If Taxable Income Is: The Tax Is:
Not Over $9,325 10% of the taxable income
Over $9,325 but not over $37,950 $932.50 plus 15% of excess over $9,325
Over $37,950 but not over $91,900 $5,226.25 plus 25% of excess over $37,950
Over $91,900 but not over $191,650 $18,713.75 plus 28% of excess over $91,900
Over $191,650 but not over $416,700 $46,643.75 plus 33% of excess over $191,650
Over $416,700 but not over $418,400 $120,910.25 plus 35% of excess over $416,700
Over $418,400 $121,505.25 plus 39.6% of excess over $418,400

Standard Deduction

Filing Status Standard Deduction
Married Filing Jointly/Surviving Spouses $12,700
Heads of Household $9,350
All Other Taxpayers $6,350

Projected Alternative Minimum Tax Exemptions

Filing Status Exemption Amount
Married Filing Jointly/Surviving Spouses $84,500
Unmarried Individuals (other than Surviving Spouses) $54,300
Married Individuals Filing Separate Returns $42,250
Estates and Trusts $24,100

Remember these are ONLY predictions. Stay tuned for updates on the actual 2017 income tax brackets and how they’ll potentially affect your tax responsibilities.

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