• 2017 Inflation Adjustments for Income Tax and Estate Tax Released
  • January 2, 2017 | Author: Katherine Esshaki Wensink
  • Law Firm: McDonald Hopkins LLC - Cleveland Office
  • Recently, the Internal Revenue Service released Rev. Proc. 2016-55 outlining the 2017 inflationary adjustments. These adjustments affect various income tax rate thresholds and the estate and gift tax exemption.

    Some highlights of the new income tax rates and deductions are as follows:

    INCOME TAX

    2016

    2017

    Standard Deduction

    6,300 Single

    12,600 Married Filing Jointly (MFJ)

    6,350 Single

    12,700 MFJ

    Personal Exemption

    4,050

    4,050

    AMT Exemption

    53,900 Single

    83,800 MFJ

    54,300 Single

    84,500 MFJ

    Adoption Credit

    Up to 13,460

    Up to 13,570

    Max Earned Income Credit

    6,269 MFJ w/3+ children

    6,318 MFJ w/3+ children

    TAX RATES



    10%

    <9,275 Single

    <18,550 MFJ

    <9,325 Single

    <18,650 MFJ

    15%

    9,275 Single

    18,550 MFJ

    9,325 Single

    18,650 MFJ

    25%

    37,650 Single

    75,300 MFJ

    37,950 Single

    75,900 MFJ

    28%

    91,150 Single

    151,900 MFJ

    131,200 Single

    153,100 MFJ

    33%

    190,150 Single

    231,450 MFJ

    212,500 Single

    233,350 MFJ

    35%

    413,350 Single

    413,350 MFJ

    416,700 Single

    416,700 MFJ

    39.6%

    415,050 Single

    466,950 MFJ

    444,450 Single

    470,700 MFJ


    The exemption from the kiddie tax in 2017 remains the same as 2016 at $2,100. If a child's income is more than $1,050 and less than $10,500, a parent can include the child's income on the parents' return.

    The estate and gift tax rates are also affected. Currently, an individual may give away during life and at death an amount equal to $5.45 million. In 2017, the amount will rise to $5.49 million, effectively shielding $10.98 million for a married couple.

    The annual gift tax exclusion will remain at $14,000, as it has been for the last several years. The amount that may be gifted to a non-citizen spouse is raised in 2017 to $149,000, up from $148,000.