The Standard Deduction for 2016 will remain the same for all filing statuses except Head of houshold which will increase to $9300. $12,600 for Married and Qualified Widower, $6,300 for Single.Blind people will receive an additional $1250 ($1550 if unmarried and not a surving spouse).
People age 65 or older will get an additional $1250 while singles in that age group will receive an additional $1550.
Personal exemptions will increase to $4050 up $50 from 2015.
The tax rate schedules also increase this year once again. The 10% tax bracket for a single filing status is $0 to $9,275 for 2016. 2014's bracket for the same was $0 to $9225. A difference of $50. But like a snow ball rolling downhill, the higher income earners will benefit a bit better. In 2015, a single taxpayer did not start paying 39.6% until taxable income reached $413,200. This year the margin increased to $415,050. A difference of $1850.
The Itemized Deductions and Personal Exemptions have a higher level before phaseout begins in 2015. The AGI level for a single taxpayer is $259,400, Married filing Joint is $311,300.
The Social Security wage base will remain the same for 2016 as it was in 2015 at $118,500.
Taxpayers who are able to make deductible contributions to a Health Savings Account (HSA) will be able to add a little more for medical expenses for family coverage. The maximum rises to $6750 for account owners with a family coverage while the max remains at $3350 for self only coverage.
Taxpayers who have the ability to contribute to a Flexible Spending Account can make contributions in 2016 up to $2,550.
The maximum amount allowed to contribute to a 401K, 403B and 457 plan in 2016 remains at $18,000. Simple plan limits to $12,500. Taxpayers who are 55 or older can increase these amounts with catch up contributions.
Contribution levels for Traditional and Roth IRA's remain the same at $5500, with the same catch up contributions allowed.
The Standard Mileage rate decreases to 54 cents a mile for business use, medical and moving rate decreases to 19 cents, while charitable miles remain at 14 cents per mile. ( With the decrease in gas prices, I would not be surprised if these numbers are revised as the year progresses)
On 12/18/2015, the President signed into law "The New PATH Act of 2015". This Act revived over 50 tax law provisions that have been being extended by one year on a yearly basis for several years. With the passage of this act many of the most popular and tax saving provisions for the middle class were made permanent. These include the American Opportunity Credit for college tuition, the enhanced child tax credit with lower thresholds of income to allow for additional credit which is refundable, and the enhanced earned income credit allowing for increased benefits for three or more children, to name a few. Some provisions were given a new life sentnece until 2019 while still others were only given until the end of 2016.