IRS Announces Cost of Living Increases for 2015

The IRS has announced 2015 tax rate schedules and cost-of-living increases for several important tax items.

The IRS has announced most of the annual inflation adjustments for tax year 2015. These include 2015 tax rate schedules and cost-of-living increases for several important tax items.

2015 Tax Brackets

The tax brackets for 2015 are shown in the chart below for single taxpayers and married couples filing jointly. Note carefully that these tax brackets take effect on January 1, 2015. They do not apply to your 2014 taxes.

The brackets show a modest expansion over 2014, and this will slightly lower everyone’s income taxes. For example, in 2014, the 10% bracket applied on income up to $9,075 for singles and $18,150 for married couples filing jointly. In 2015, the 10% bracket applies up to $9,225 for singles and $18,450 for married couples—an increase of $150 and $300 respectively. This means that you’ll pay a 10% income tax instead of a 15% tax on that additional amount of income in 2015. A savings of $15 for singles and $30 for married couples. On the other end of the income scale, the top tax rate of 39.6% applies to singles whose income in 2015 exceeds $413,200, $464,850 for married couples filing jointly, up from $406,750 and $457,600 in 2014, respectively.

Tax Bracket Income If Single Income If Married Filing Jointly
10% Up to $9,225 Up to $18,450
15% $9,226 to $37,450 $18,451 to $74,900
25% $37,451 to $90,750 $74,901 to $151,200
28% $90,751 to $189,300 $151,201 to $230,450
33% $189,301 to $411,500 $230,451 to $411,500
35% $411,501 to $413,200 $411,501 to $464,850
39.60% All over $413,200 All over $464,850

Standard Deduction

The standard deduction has also gone up. The standard deduction for singles in 2015 is $6,300 and $12,600 for marrieds filing jointly. An increase of $100 and $200 respectively. The standard deduction for heads of households has gone up to $9,250 for 2015; it was $9,100 in 2014.

Personal Exemption

The personal exemption in 2015 is $4,000, up from $3,950 in 2014. However, the exemption is phased out for individuals with adjusted gross incomes of $258,250-$380,750, and for married couples with AGIs of $300,900-$432,400.

Itemized Deductions

The ability to take itemized deductions is also phased out for taxpayers whose incomes exceed certain levels. For 2015, these “Pease limitations” begin for individual taxpayers with incomes of $258,250 or more, $309,900 for married couples filing jointly.

AMT

The Alternative Minimum Tax exemption amount for 2015 is $53,600 for singles, and $83,400 for marrieds filing jointly, up from $52,800 and $82,100 respectively.

Kiddie Tax

The amount of unearned income a child can receive without have to pay income tax is $1,050 for 2015, the same as for 2014.

Retirement Plan Contribution Limits

The annual contribution limit for employees who participate in 401(k), 403(b), and most 457 retirements plans is $18,000 in 2015, up from $17,500 in 2014. The catch-up contribution limit for employees aged 50 and over who participate in such plans is $6,000 in 2015, up from $5,500 in 2014.

Self-employed taxpayers with solo 401(k) plans or SEP-IRAs may contribute up to $53,000 in 2015, up from $52,000 in 2014.

IRAs

The limit on annual contributions to Individual Retirement Arrangements (IRAs) remains unchanged for 2015 at $5,500. The additional catch-up contribution limit for individuals aged 50 and over remains $1,000.

Estate Tax

Estates of people who die during 2015 will have a basic exclusion amount of $5,430,000, up from $5,340,000 for 2014. Meanwhile, the annual exclusion for gifts remains at $14,000 for 2015. For 2015, the exclusion from tax on a gift to a spouse who is not a U.S. citizen is $147,000, up from $145,000 for 2014.

Talk to a Tax Attorney

Need a lawyer? Start here.

How it Works

  1. Briefly tell us about your case
  2. Provide your contact information
  3. Choose attorneys to contact you
NEED PROFESSIONAL HELP ?

Talk to a Tax attorney.

How It Works

  1. Briefly tell us about your case
  2. Provide your contact information
  3. Choose attorneys to contact you