Every year, the IRS announces the new tax brackets for the coming year's personal income taxes. These new tax brackets allow for inflation adjustments, cost of living adjustments and other financial tax items. These are the numbers that everyone will need to know for the tax returns we will be expected to file in 2016. If you had any income at all during the year, it is your responsibility to know what's included in the 2015 IRS tax brackets and tables.
Estimated Tax Brackets:
As usual, the IRS has different brackets for different groups of taxpayers; single filers, married joint filers, and head of household filers. The top marginal income tax rate of 39.6% will only affect those taxpayers that hold a taxable income of $413,200 or higher for single filers and $464,850 and higher for those who are married.
The standard deductions for filing taxes will also see an adjustment in the coming tax year. Taxpayers will see an increase of $100 for singles and $200 for couples who file jointly. That means that single taxpayers will have a standard allowable deduction of $6,300 for the year while married couples will have a $12,600 deduction. The personal exemption will be $4,000.
PEP and Pease:
High income earners will also see adjustments in their tax liability when they file taxes next year. The government has two provisions that will increase the income that will become taxable. The new income threshold for both of these provisions will be $258,250 for single filers and $309,900 for those who are married. With the PEP phaseout ending at $380,750 for singles and $432,400 for couple these high income earners will no longer be allowed to claim a personal exemption.
Alternative Minimum Tax:
One new adjustment you will see with the new 2015 IRS tax brackets and tables is an adjustment to the Alternative Minimum Tax, which has not seen an adjustment since the 1960s. This new change is coming as a result of the American Taxpayer Relief Act of 2012, which was passed on January 2, 2013. The AMT exemption for the tax year is $53,600 for singles and $83,400 for married couples filing jointly.
Earned Income Tax Credit:
Finally the new 2015 IRS tax brackets and tables will see a new Earned Income Tax Credit for everyone. For singles with no children the credit will be $503 and for those with children it will be adjusted based on the number of children there are in the household.
There are many changes that taxpayers will have to become familiar with before they file their taxes in the coming year. This means that everyone will have to prepare for a completely new set of numbers to understand.
Filing taxes is always a complicated task and few people look forward to it, but it's important that we all get to know what's included in the tax brackets and prepare accordingly. The IRS has released this information six months prior to the final tax date so that everyone will have an opportunity to become familiar with it and can be ready to file accordingly when the time comes.