Wolters Kluwer, CCH Projects Inflation-Adjusted Tax Brackets and Other Amounts for 2015

As a service to our subscribers, Wolters Kluwer, CCH has prepared projected inflation-adjusted tax bracket numbers for the 2015 Tax Rate Schedules, the standard deduction, personal exemption and other tax amounts for use in year-end and 2015 tax planning. The projected figures are based on the inflation-adjustment provisions of the Internal Revenue Code (IRC) as currently in force. Those adjustments use the average inflation index for the 12-month period ending on August 31, 2014, published in the Consumer Price Index for All Urban Consumers (CPI-U) by the U.S. Department of Labor. The rate of inflation as measured for tax purposes represented an approximate 1.58-percent increase over the course of 2014, based on CPI-U indexes released for that 12-month period. The Department of Labor released the index on September 17, 2014.

Tax Brackets

For 2015, for married taxpayers filing jointly and surviving spouses, the maximum taxable income for the 10-percent bracket is $18,450, (up from $18,150 for 2014); for the 15-percent tax bracket, $74,900 (up from $73,800 for 2014); for the 25-percent tax bracket, $151,200 (up from $148,850 for 2014); for the 28-percent tax bracket, $230,450 (up from $226,850 for 2014); for the 33-percent tax bracket, $411,500 (up from $405,100 for 2014); and for the 35-percent tax bracket, $464,850 (up from $457,600 for 2014). Above the 35-percent threshold, taxpayers will fall within the top 39.6-percent tax bracket.

For heads of household, the maximum taxable income for the 10-percent bracket is $13,150 (up from $12,950 for 2014); for the 15-percent tax bracket, $50,200 (up from $49,400 for 2014); for the 25-percent tax bracket, $129,600 (up from $127,550 for 2014); for the 28-percent tax bracket, $209,850 (up from $206,600 for 2014); for the 33-percent tax bracket, $411,500 (up from $405,100 for 2014); and for the 35-percent tax bracket, $439,000 (up from $432,200 for 2014). Above the 35-percent threshold, taxpayers will fall within the top 39.6-percent tax bracket.

For unmarried, single filers who are not heads of household or surviving spouses, the maximum taxable income for the 10-percent bracket is $9,225 (up from $9,075 for 2014); for the 15-percent tax bracket, $37,450 (up from $36,900 for 2014); for the 25-percent tax bracket, $90,750 (up from $89,350 for 2014); for the 28-percent tax bracket, $189,300 (up from $186,350 for 2014); for the 33-percent tax bracket, $411,500 (up from $405,100 for 2014); and for the 35-percent tax bracket, $413,200 (up from $406,750 for 2014). Above the 35-percent threshold, taxpayers will fall within the top 39.6-percent tax bracket.

For married taxpayers filing separately, the maximum taxable income for the 10-percent bracket is $9,225 (up from $9,075 for 2014); for the 15-percent tax bracket, $37,450 (up from $36,900 for 2014); for the 25-percent tax bracket, $75,600 (up from $74,425 for 2014); for the 28-percent tax bracket, $115,225 (up from $113,425 for 2014); for the 33-percent tax bracket, $205,750 (up from $202,550 for 2014); and for the 35-percent tax bracket, $232,425 (up from $228,800 for 2014). Above the 35-percent threshold, taxpayers will fall within the top 39.6-percent tax bracket.

For estates and trusts, the maximum taxable income for the 15-percent bracket is $2,500 (the same as for 2014); for the 25-percent tax bracket, $5,900 (up from $5,800 for 2014); for the 28-percent tax bracket, $9,050 (up from $8,900 for 2014); and for the 33-percent tax bracket, $12,300 (up from $12,150 for 2014). Above the 33-percent threshold, taxpayers will fall within the top 39.6-percent tax bracket.

Standard Deduction

The 2015 standard deduction will rise by $100 for single taxpayers to $6,300, from $6,200 for 2014. For married joint filers, the standard deduction will rise to $12,600, up from $12,400 for 2014. For heads of household, the standard deduction will be $9,250, up from $9,100 for 2014. The additional standard deduction for blind and aged married taxpayers will increase to $1,250 (up from $1,200 for 2014). For unmarried taxpayers who are blind or aged, the amount of the additional standard deduction remain the same ($1,550).

Limitation on Itemized Deductions

For higher-income taxpayers who itemize their deductions, the limitation on itemized deductions will be imposed as follows:

— For married couples filing joint returns or surviving spouses, the income threshold will be $309,900, up from $305,050 for 2014.

— For heads of household, the threshold will be $284,050 in 2014, up from $279,650 for 2014.

— For single taxpayers, the threshold will be $258,250, up from $254,200 for 2014.

— For married taxpayers filing separate returns, the 2015 threshold will be $154,950, up from $152,525 for 2014.

Personal Exemptions

The 2015 personal exemption will increase by $50, to $4,000, up from $3,950 for 2014. The phaseout of the personal exemption for higher income taxpayers will begin after taxpayers pass the same income thresholds set forth for the limitation on itemized deductions.

Wolters Kluwer, CCH projects that the phase out of the personal exemption will be complete at the following levels:

— For married couples filing joint returns or surviving spouses, the ceiling threshold will be $432,400, up from $427,550 for 2014.

— For heads of household, the ceiling threshold will be $406,550 in 2014, up from $402,150 for 2014.

— For single taxpayers, the ceiling threshold will be $380,750, up from $376,700 for 2014.

— For married taxpayers filing separate returns, the 2015 ceiling threshold will be $216,200, up from $213,775 for 2014.

Estate and Gift Tax

Gift Tax. The gift tax annual exemption will remain the same for 2015 as for 2014, at $14,000.

Estate Tax. The estate and gift tax applicable exclusion will increase from $5,340,000 in 2013 to $5,430,000 in 2014.

Gifts to Noncitizen Spouses. The first $147,000 of gifts made in 2015 to a spouse who is not a U.S. citizen will not be included in taxable gifts, up $2,000 from $145,000 for 2014.

AMT Exemptions

The American Taxpayer Relief Act of 2012 (ATRA) (P.L. 112-240) provided for the annual inflation adjustment of the exemption from alternative minimum tax (AMT) income. Previously, this inflation adjustment had to be enacted by Congress each year. Wolters Kluwer, CCH projects that, for 2015, the AMT exemption for married joint filers and surviving spouses will be $83,400 (up from $82,100 for 2014). For heads of household and unmarried single filers, the exemption will be $53,600 (up from $52,800 for 2014). For married separate filers, the exemption will be $41,700 (up from $41,050 for 2014). For estates and trusts, the exemption will be $23,800 (up from $23,500 for 2014).

For a child to whom the so-called “kiddie tax” under Code Sec. 1(g) applies, the exemption amount for AMT purposes may not exceed the sum of the child’s earned income for the tax year, plus $7,400 (up from $7,250 for 2014).

Other Amounts

Roth IRA Contributions. Contributions to a Roth Individual Retirement Account (IRA) are limited for taxpayers with adjusted gross income above certain limits adjusted annually for inflation. For 2015, the allowed Roth IRA contribution amount phases out for married taxpayers filing jointly with income between $183,000 and $193,000 (up from $181,000 and $191,000 for 2014). For heads of household and unmarried filers, the phaseout range is between $116,000 to $131,000 (up from $114,000 and $129,000 for 2014).

IRA Contributions. The maximum amount of deductible contributions that can be made to an IRA will remain at $5,500 for 2015, the same as in 2014. The increased contribution amount for taxpayers age 50 and over will therefore also remain the same, at $6,500.

The above-the-line deduction for traditional IRA contributions will begin to phase out for married joint filers whose income is greater than $98,000 if both spouses are covered by a retirement plan at work (up from $96,000 for 2014). If only one spouse is covered by a retirement plan at work, the phaseout begins when modified adjusted gross income reaches $183,000 (up from $181,000 for 2014). The phaseout is complete for these taxpayers at levels of $118,000 and $193,000, respectively (up from $116,000 and $191,000 for 2014).

For heads of household and unmarried filers who are covered by a retirement plan at work, the 2015 income phaseout range for deductible IRA contributions is $61,000 to $71,000, up from $60,000 to $70,000 for 2014.

Education Savings Bond Interest Exclusion. When U.S. savings bonds are redeemed to pay expenses for higher education, the interest may be excluded from income if the taxpayer’s income is below a certain range. For 2015, the phaseout range for single filers will be from $77,200 to $92,200 (up from $76,000 to $91,000 for 2014). For joint filers the 2015 phaseout range will be $115,750 to $145,750 (up from $113,950 to $143,950 for 2014).

Phaseout of Student Loan Interest Deduction. For 2015, the $2,500 student loan interest deduction will begin to phase out for married joint filers with modified adjusted gross income (MAGI) above $130,000 (for married joint filers), the same as for 2014. For single taxpayers, the 2015 deduction will begin to phase out at a MAGI level of over $65,000, which is also the same rate as for 2014. The deduction will be completely phased out for married couples with MAGI above $160,000 ($80,000 for single filers).

Medical savings accounts. The minimum–maximum range for premiums used to determine whether a medical savings account (MSA) is tied to a high-deductible health plan for 2015 will be $2,200–$3,300 for self-only coverage (up from $2,200–$3,250 for 2014) and $4,450–$6,650 for family coverage (up from $4,350–$6,550 for 2014).

Self-only coverage plans are subject to a $4,450 maximum amount for annual out-of-pocket costs (up from $4,350 for 2014). Family coverage plans have a $8,150 annual limit (up $8,000 for 2014).

Limitation on Flexible Spending Arrangements (FSAs). The limitation on the amount of salary reductions an employee may elect to contribute to a cafeteria plan under an FSA increases to $2,550 for 2015, up $50 from the limit for 2014 and 2013.

Foreign Earned Income/Housing. The amount of the 2015 foreign earned income exclusion under Code Sec. 911 will be $100,800, up from $99,200 for 2014. The maximum foreign earned income housing deduction for 2015 will be $30,240, up from $29,760 for 2014.

By Jennifer Cordaro, CCH News Staff

 

AUTHOR

Wolters Kluwer Tax and Accounting

Wolters Kluwer Tax and Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency. Wolters Kluwer Tax and Accounting is part of Wolters Kluwer N.V. (AEX: WKL), a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide. Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).

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