IRS Releases Its New Policies For 2017, New Tax Rates, Standard Deductions, Exemption Amounts And More
All these adjustments applicable for the tax year 2017 shall be effective only for this coming January 1, 2017. Therefore, these numbers are not the numbers and tax rates to be used in preparation of the tax returns for 2016 in 2017. Relatively, these tax rates shall be applicable in the preparation of the tax returns for 2017 to be submitted in the year 2018.
If a certain tax payer does not expect any substantial changes in his annual tax return, he may use the updated tax tables to be able to estimate his liability for the 2017 tax year. However, if a person is expecting to make more money, get married, purchase a house or have a baby, he must consider adjusting his withholding or modifying his estimated tax payments.
This coming 2017, for single taxpayers and married couples filing separately, the standard salary deduction is $6,350 which is higher from the standard $6,300 this 2016. For married couples filing jointly, on the other hand, the standard deduction will be $12,700, which is also higher by $100 from the previous year. For the heads of households, from $9,300 in 2016, the standard deduction for 2017 will be $9,300.
Meanwhile, for the aged and the blind, the additional standard deduction is $1,250. If the individual is an unmarried one and not a surviving spouse, the additional standard deduction amount is increased to $1,550.
The Pease limitations, named after former Rep. Don Pease (D-OH), will be applicable for those taxpayers who itemize their deductions. They may cap or phase out certain deductions for taxpayers with higher incomes.
The Pease limitations are applicable to charitable donations, the home mortgage interest deduction, state and local tax deductions and miscellaneous itemized deductions. They, however, do not apply to items such as medical and investment expenses, gambling losses and certain casualty and theft losses.
Same as in 2016, the personal exemption amount for 2017 will be $4,050. However, said exemption is subject to a phase-out which commences with adjusted gross incomes of $261,500 ($313,800 for married couples filing jointly). It completely phases out at $384,000 ($436,300 for married couples filing jointly).
Other cost-of-living and tax adjustments are available through Rev. Proc. 2016-55.