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William Byrnes (Texas A&M) tax & compliance articles

In 2015, Various Tax Benefits Increase Due to Inflation Adjustments

Posted by William Byrnes on November 5, 2014


The tax items for tax year 2015 of greatest interest to most taxpayers include the following dollar amounts –IRS logo

  • The tax rate of 39.6 percent affects singles whose income exceeds $413,200 ($464,850 for married taxpayers filing a joint return), up from $406,750 and $457,600, respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds are described in the revenue procedure.
  • The standard deduction rises to $6,300 for singles and married persons filing separate returns and $12,600 for married couples filing jointly, up from $6,200 and $12,400, respectively, for tax year 2014. The standard deduction for heads of household rises to $9,250, up from $9,100.
  • The limitation for itemized deductions to be claimed on tax year 2015 returns of individuals begins with incomes of $258,250 or more ($309,900 for married couples filing jointly).
  • The personal exemption for tax year 2015 rises to $4,000, up from the 2014 exemption of $3,950. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $258,250 ($309,900 for married couples filing jointly). It phases out completely at $380,750 ($432,400 for married couples filing jointly.)
  • The Alternative Minimum Tax exemption amount for tax year 2015 is $53,600 ($83,400, for married couples filing jointly). The 2014 exemption amount was $52,800 ($82,100 for married couples filing jointly).
  • The 2015 maximum Earned Income Credit amount is $6,242 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,143 for tax year 2014. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phaseouts.
  • Estates of decedents who die during 2015 have a basic exclusion amount of $5,430,000, up from a total of $5,340,000 for estates of decedents who died in 2014.
  • 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.
  • For 2015, the foreign earned income exclusion breaks the six-figure mark, rising to $100,800, up from $99,200 for 2014.
  • The annual exclusion for gifts remains at $14,000 for 2015.
  • The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) rises to $2,550, up $50 dollars from the amount for 2014.
  • Under the small business health care tax credit,  the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,800 for tax year 2015, up from $25,400 for 2014.

.01 Tax Rate Tables. For taxable years beginning in 2015, the tax rate tables under § 1 are as follows:

TABLE 1 – Section 1(a) – Married Individuals Filing Joint Returns and Surviving Spouses

If Taxable Income Is & The Tax Is:

  1. Not over $18,450 10% of the taxable income
  2. Over $18,450 but $1,845 not over $74,900 plus 15% of the excess over $18,450
  3. Over $74,900 but $10,312.50 not over $151,200 plus 25% of the excess over $74,900
  4. Over $151,200 but $29,387.50 not over $230,450 plus 28% of the excess over $151,200
  5. Over $230,450 but $51,577.50 not over $411,500 plus 33% of the excess over $230,450
  6. Over $411,500 but $111,324 not over $464,850 plus 35% of the excess over $411,500
  7. Over $464,850 $129,996.50 plus 39.6% of the excess over $464,850

TABLE 3 – Section 1(c) – Unmarried Individuals (other than Surviving Spouses and Heads of Households)

If Taxable Income Is & The Tax Is:

  1. Not over $9,225 10% of the taxable income
  2. Over $9,225 but $922.50 not over $37,450 plus 15% of the excess over $9,225
  3. Over $37,450 but $5,156.25 not over $90,750 plus 25% of the excess over $37,450
  4. Over $90,750 but $18,481.25 not over $189,300 plus 28% of the excess over $90,750
  5. Over $189,300 but $46,075.25 not over $411,500 plus 33% of the excess over $189,300
  6. Over $411,500 $119,401.25 not over $413,200 plus 35% of the excess over $411,500
  7. Over $413,200 $119,996.25 plus 39.6% of the excess over $413,200

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