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2016 Tax Brackets: A Complete Guide
December 22, 2015Pay attention to a few changes regarding your taxes for 2016. There are changes regarding mileage rates, personal exemptions, and estate taxes.
The IRS adjusts dollar limitations on benefits, contributions, and other employee benefit plan limits each year based on inflation.
So what exactly has changed for 2016?
Most amounts have not changed for this year, but you will note a few adjustments in certain areas.
| Important Tax Figures for 2016 | ||
|---|---|---|
| Social Security/Medicare | 2016 | 2015 |
| Social Security Tax Wage Base | $118,500 | $118,500 |
| Medicare Tax Wage Base | No limit | No limit |
| Employee portion of Social Security | 6.2% | 6.2% |
| Individual Retirement Accounts | 2016 | 2015 |
| Roth IRA Individual, up to 100% of earned income | $5,500 | $5,500 |
| Traditional IRA Individual, up to 100% of earned Income | $5,500 | $5,500 |
| Roth and traditional IRA additional annual "catch-up" contributions for account owners age 50 and older | $1,000 | $1,000 |
| Qualified Plan Limits | 2016 | 2015 |
| Defined Contribution Plan limit on additions on Sections 415(c)(1)(A) | $53,000 | $53,000 |
| Defined Benefit Plan limit on benefits (Section 415(b)(1)(A)) | $210,000 | $210,000 |
| Maximum compensation used to determine contributions | $265,000 | $265,000 |
| 401(k), SARSEP, 403(b) Deferrals (Section 402(g)), & 457 deferrals (Section 457(b)(2)) | $18,000 | $18,000 |
| 401(k), 403(b), 457 & SARSEP additional "catch-up" contributions for employees age 50 and older | $6,000 | $6,000 |
| SIMPLE deferrals (Section 408(p)(2)(A)) | $12,500 | $12,500 |
| SIMPLE additional "catch-up" contributions for employees age 50 and older | $3,000 | $3,000 |
| Compensation defining highly compensated employee (Section 414(q)(1)(B)) | $120,000 | $120,000 |
| Compensation defining key employee (officer) | $170,000 | $170,000 |
| Compensation triggering Simplified Employee Pension contribution requirement (Section 408(k)(2)(c)) | $600 | $600 |
| Driving Deductions | 2016 | 2015 |
| Business mileage, per mile | 54 cents | 57.5 cents |
| Charitable mileage, per mile | 14 cents | 14 cents |
| Medical and moving, per mile | 19 cents | 23 cents |
| Business Equipment | 2016 | 2015 |
| Maximum Section 179 deduction | $500,000 | $500,000 |
| Phaseout for Section 179 | $2,000,000 | $2,000,000 |
| Transportation Fringe Benefit Exclusion | 2016 | 2015 |
| Monthly commuter highway vehicle and transit pass | $255 | $255 |
| Monthly qualified parking | $255 | $250 |
| Standard Deduction | 2016 | 2015 |
| Married filing jointly | $12,600 | $12,600 |
| Single (and married filing separately) | $6,300 | $6,300 |
| Heads of Household | $9,300 | $9,250 |
| Personal Exemption | 2016 | 2015 |
| Amount | $4,500 | $4,000 |
| Personal Exemption Phaseout | 2016 | 2015 |
| Married filing jointly and surviving spouses | Begins at $311,300 | Begins at $309,900 |
| Heads of Household | Begins at $285,350 | Begins at $284,050 |
| Unmarried individuals | Begins at $259,400 | Begins at $258,250 |
| Married filing separately | Begins at $155,650 | Begins at $154,950 |
| Domestic Employees | 2016 | 2015 |
| Threshold when a domestic employer must withhold and pay FICA for babysitters, house cleaners, etc. | $1,900 | $1,900 |
| Kiddie Tax | 2016 | 2015 |
| Net unearned income not subject to the "Kiddie Tax" | $2,100 | $2,100 |
| Estate Tax | 2016 | 2015 |
| Federal estate tax exemption | $5.45 million | $5.43 million |
| Maximum estate tax rate | 40% | 40% |
| Annual Gift Exclusion | 2016 | 2015 |
| Amount you can give each recipient | $14,000 | $14,000 |
Questions? Contact any member of our Tax Services Team.
