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Tax Threshold Adjustments for 2017

What’s ahead for taxes? Every year, the IRS updates tax provisions based on annual inflation. There are over 50 tax provisions for the 2017 tax year (tax returns to be filed in 2018). The most relevant ones for planning purposes include those in the following table.

Tax thresholds differences for 2016 and 2017

The differences in tax provisions are reflected below only for married filing jointly and single filers. This chart is not intended to be the final word on amount of tax owed, but illustrates the differences to expect in common filing categories for 2016 and 2017 tax years.

2016 2016 2017 2017
Category Single filers Married/Joint Single filers Married/Joint
39.6% bracket $415,050. + $466,950. + $418,400. + $470,000. +
35% bracket $413,350-$415,049 $413,350-$466,949 $416,700-$418,399 $416,700 -$469,999
33% bracket $190,150-$413,349 $231,450-$413,349 $191,650-$416,699 $233,350 -$416,999
28% bracket $91,150-$190,149 $151,900-$231,449 $91,900-$191,649 $153,100-$233,349
25% bracket $37,650-$91,149 $75,300-$151,899 $37,950-$91,899 $75,900-$153.099
15% bracket $9,275-$37,649 $18,550-$75,299 $9,325-$37,949 $18,650-$75,899
10% bracket Less than $9,275 Less than $18,550 Less than $9,325 Less than $18,650
Standard deduction $6,300 $12,600 $6,350 $12,700
Personal exemption $4,050 (no change 2016-2017) $4,050 (no change 2016-2017) Phase out at $313,800 – $436,300 Phase out at $261,500 – $384,000
Alternative min. tax $53,900 $83,800 $54,300 phases out at $120,700 $84,500 phases out at $160,900
Earned Income Tax Credit (3+ qualifying children) $6,269 $6,318

Provisions unrelated to tax filing status

Category 2016 2017
Lifetime Learning Credit (AGI to determine reduction) $111,000 $112,000
Adoption Tax Credit (phase out based on income) $13,460 $14,570
Foreign earned income exclusion $101,300 $102,100
Unified credit against estate tax $5.45 million $5.49 million
Transportation fringe benefit limit $130 $255 (qualified parking also $255

Health coverage

Taxpayers must pay a minimum $695 a year to be considered insured for health care and not incur a penalty. Participants with self-only coverage in a medical savings account must have an annual deductible of not less than $2,250, but not more than $3,350 (same for 2016 and 2017). For self-only coverage in 2017, the maximum out-of-pocket expense amount is $4,500, an increase of $50 over 2016. Participants with family coverage, the floor for the annual deductible is $4,500, up from $4,450. The 2017 deductible cannot exceed $6,750, also an increase of $50 over tax year 2016. The family coverage out-of-pocket expense limit is $8,250, up from $8,150.

Please talk with your Salmon Sims Thomas tax advisor if you have questions about tax planning.