This article was last updated on February 5
Given the low inflation environment over the last year, the 2015 IRS Tax Brackets, standard deductions and personal exemptions have only seen a moderate increase over 2014 levels. Federal income tax brackets and related tax items, under the tax code, provide for mandatory annual adjustments based on inflation. This is to prevent the phenomenon known as bracket creep which refers to individuals being pushed into higher tax brackets due to income inflation
Based the IRS official release (Procedure 2014-61) here are some of the other key 2015 tax changes:
- Marginal tax rates will remain the same as last year with 39.6% being the highest marginal tax rate. But since tax brackets ranges will increase, people with no income increases will actually see a lower marginal tax rate (see this article for details on this effect)
- The standard deduction increased by $100 again in 2015 for single filers and married people filing separate returns. For married filers filing joint returns the standard deduction increase was $200 and for heads of household the increase was $150.
- The personal exemption rose by another $50 in 2015 to $4,000. However, the exemption is subject to a phase-out (per law enacted earlier this year) that begins with AGI of $258,250 ($309,900 for married couples filing jointly). It phases out completely at $380,750 ($432,400 for married couples filing jointly).
- The Alternative Minimum Tax (AMT) exemption amount for single filers rose to $53,600 vs $52,800 in 2014. It will be $83,400, for married couples filing jointly vs $82,100 in 2014
- The maximum Earned Income Credit (EIC) amount rises to $6,242 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,143 from the last tax year
Update: Final 2015 IRA and 401K limits have also been published by the IRS which you can see in this article.
- The gift tax exclusion will remain at $14,000
- Flexible spending arrangements (FSA) employee contribution limits will rise by $50 to $2,550 as mandated in the new Affordable Care Act.
- Foreign earned income exclusion broke the six figure mark for the first time and rose by $1,600 to $100,800
See this article for 2016 tax bracket figures (for taxes filed in 2017)