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Slight Increase in Tax Brackets Projected for Tax Year 2017

Inflation-adjusted tax brackets are anticipated to go up slightly next year, according to a pair of new reports, but that could reduce the tax burden for many taxpayers.

One report, from  Bloomberg BNA, predicts the top 39.6 percent tax bracket will begin at $470,700 for married taxpayers filing joint returns and at $418,400 for unmarried individuals. This represents an increase from $466,950 and $415,050, respectively in 2016.A second report from Thomson Reuters predicts that the basic standard deduction for heads of household, the additional deduction, and the exemption amounts, will increase to $4,050. The starting point for phasing out taxpayers’ personal exemptions is expected to range from $313,800 for spouses filing jointly and surviving spouses, and $287,650 for heads of household, to $261,500 for single taxpayers. Similar higher dollar thresholds are expected to apply to the phaseout of itemized deductions. In contrast, this year, phaseouts began at $311,300 of adjusted gross income for joint filers, $285,350 for heads of household, and $259,400 for singles. The higher phaseout levels prevent inflation from eating into the value of these deductions.  In addition, the 2017 standard deduction is expected to rise $50 for single taxpayers, and $100 for married joint filers, according to Wolters Kluwer estimates.

Since the late 1980s, the Tax Code has required that federal income tax brackets be adjusted for inflation annually.  Estimates for any of the inflation-adjusted tax figures for 2017 are, of course, subject necessarily to any changes to the tax law that may be made by Congress over the course of the next year.

If you have any questions or would like to know how these and the many other predicted changes may affect your personal tax position, please don’t hesitate to contact your Hysjulien and Associates professional.  We can review your current and projected tax picture and recommend any adjustments on withholdings or investments to  provide optimal benefit to both you and your beneficiaries.

September 23rd, 2016

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