Recently, the Internal Revenue Service released Rev. Proc. 2014-61 outlining the 2015 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 | 2014 | 2015 SINGLE |
|---|---|---|
| Standard Deduction |
6,200 Single 12,400 Married Filing Jointly (MFJ) |
6,300 Single 12,600 MFJ |
| Personal Exemption | 3,950 | 4,000 |
| AMT Exemption |
52,800 Single 82,100 MFJ |
53,600 Single 83,400 MFJ |
| Adoption Credit | Up to 13,190 | Up to 13,400 |
| Max Earned Income Credit | 6,143 MFJ w/3+ children | 6,242 MFJ w/3+ children |
| TAX RATES | ||
| 10% |
<9,075 Single <18,150 MFJ |
<9,225 Single <18,450 MFJ |
| 15% |
9,075 Single 18,150 MFJ |
9,225 Single 18,450 MFJ |
| 25% |
36,900 Single 73,800 MFJ |
37,450 Single 74,900 MFJ |
| 28% |
89,350 Single 148,850 MFJ |
90,750 Single 151,200 MFJ |
| 33% |
186,350 Single 226,850 MFJ |
189,300 Single 230,450 MFJ |
| 35% |
405,100 Single 405,100 MFJ |
411,500 Single 411,500 MFJ |
| 39.6% |
406,750 Single 457,600 MFJ |
413,200 Single 464,850 MFJ |
The estate and gift tax rates are also affected. Currently, an individual may give away during life and at death an amount equal to $5.34 million. In 2015, the amount will rise to $5.43 million, effectively shielding $10.86 million for a married couple.
The annual gift tax exclusion will remain at $14,000, as it has been for the last two years. The amount that may be gifted to a non-citizen spouse is raised in 2015 to $147,000, up from $145,000.
The application of the higher exemption to $5.43 million will shield an additional $90,000 from taxes, which means an extra $36,000 of estate tax that will not be due.
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