2016 Tax Brackets

2016 Tax Brackets & 2017 Tax Dates

Wonder where you fall in the latest tax brackets?  Here are the 2016 tax brackets and information.  And below that – VERY IMPORTANT – are the key 2017 tax deadlines to put on your calendar today!

Estimated Income Tax Brackets and Rates

In 2016, the income limits for all brackets and all filers will be adjusted for inflation and will be as follows (Table 1). The top marginal income tax rate of 39.6 percent will hit taxpayers with taxable income of $415,050 and higher for single filers and $466,950 and higher for married filers.

Table 1. 2016 Taxable Income Brackets and Rates (Estimate)
Rate Single Filers Married Joint Filers Head of Household Filers

10%

$0 to $9,275 $0 to $18,550 $0 to $13,250

15%

$9,275 to $37,650 $18,550 to $75,300 $13,250 to $50,400

25%

$37,650 to $91,150 $75,300 to $151,900 $50,400 to $130,150

28%

$91,150 to $190,150 $151,900 to $231,450 $130,150 to $210,800

33%

$190,150 to $413,350 $231,450 to $413,350 $210,800 to $413,350

35%

$413,350 to $415,050 $413,350 to $466,950 $413,350 to $441,000

39.6%

$415,050+ $466,950+ $441,000+
Source: Author’s Calculations.

Standard Deduction and Personal Exemption

The standard deduction for single and married couples filing jointly will not increase in 2016 (Table 2). For taxpayers filing as head of household, it will increase by $50 from $9,250 to $9,300.

The personal exemption for 2016 will be $4,050.

Table 2. 2016 Standard Deduction and Personal Exemption (Estimate)
Filing Status Deduction Amount
Single  $6,300.00
Married Filing Jointly  $12,600.00
Head of Household  $9,300.00
Personal Exemption  $4,050.00
Source: Author’s Calculations.

PEP and Pease

PEP and Pease are two provisions in the tax code that increase taxable income for high-income earners. PEP is the phase-out of the personal exemption and Pease (named after former Senator Donald Pease) reduces the value of most itemized deductions once a taxpayer’s adjusted gross income reaches a certain amount.

The income threshold for both PEP and Pease will be $259,400 for single filers and $311,300 for married filers (Tables 3 and 4). PEP will end at $381,900 for singles and $433,800 for married couples filing jointly, meaning these taxpayers will no longer have a personal exemption.

Table 3. 2016 Pease Limitations on Itemized Deductions (Estimate)
Filing Status Income
Single  $259,400.00
Married Filing Jointly  $311,300.00
Head of Household  $285,350.00
Source: Author’s Calculations.
Table 4. 2016 Personal Exemption Phase-Out (Estimate)
Filing Status Phase-Out Begin Phase-Out Complete
Single  $259,400.00  $381,900.00
Married Filing Jointly  $311,300.00  $433,800.00
Head of Household  $285,350.00  $407,850.00
Source: Author’s Calculations.

Alternative Minimum Tax

Since its creation in the 1960s, the Alternative Minimum Tax (AMT) has not been adjusted for inflation. Thus, Congress was forced to “patch” the AMT by raising the exemption amount to prevent middle class taxpayers from being hit by the tax as a result of inflation.

On January 2, 2013, the American Taxpayer Relief Act of 2012 indexed the income thresholds to inflation, preventing the necessity for an annual “patch.”

The AMT exemption amount for 2016 is $53,900 for singles and $83,800 for married couples filing jointly (Table 5).

Table 5. 2016 Alternative Minimum Tax Exemptions (Estimate)
Filing Status Exemption Amount
Single  $            53,900.00
Married Filing Jointly  $            83,800.00
Married Filing Separately  $            41,900.00
Source: Author’s Calculations.

Earned Income Tax Credit

2016’s maximum Earned Income Tax Credit for singles, heads of households, and joint filers is $506, if the filer has no children (Table 6). The credit is $3,373 for one child, $5,572 for two children, and $6,268 for three or more children.

Table 6. 2016 Earned Income Tax Credit Parameters (Estimate)
Filing Status No Children One Child Two Children Three or More Children
Single or Head of Household Income at Max Credit

$6,610

$9,920

$13,930

$13,930

Maximum Credit

$506

$3,373

$5,572

$6,268

Phase out Begins

$8,270

$18,190

$18,190

$18,190

Phase out Ends (Credit Equals Zero)

$14,880

$39,296

$44,648

$47,955

Married Filing Jointly Income at Max Credit

$6,610

$9,920

$13,930

$13,930

Maximum Credit

$506

$3,373

$5,572

$6,268

Phase out Begins

$13,810

$23,730

$23,730

$23,730

Phase out Ends (Credit Equals Zero)

$20,420

$44,836

$50,188

$53,495

Source: Author’s Calculations.

information credit:   http://taxfoundation.org/article/2016-tax-brackets


2017 TAX DATES THAT YOU NEED TO MARK ON YOUR CALENDAR 

January 15, 2017 : 4th Quarter 2016 Estimated Tax Payment Due  If you are self-employed or have other fourth-quarter income that requires you to pay quarterly estimated taxes, get them postmarked by January 15, 2017.

April 18, 2017:  Individual Tax Returns Due for Tax Year 2016  If you haven’t applied for an extension, e-file or postmark your individual tax returns by midnight April 18, 2017.

ALSO due on April 18, 2017:

     Individual Tax Return Extension Form Due for Tax year 2016  Need more time to prepare your tax return?  File your request for a tax extension by April 18 to push your deadline back to October 17, 2017.

     1st Quarter 2017 Estimated Tax payment Due  If you are self-employed or have other first-quarter income that requires you to pay quarterly estimated taxes, get your Form 1040-ES postmarked by April 18, 2017.

Last Day to make a 2016 IRA Contribution  If you haven’t already funded your retirement account for 2016, do so April 18, 2017.  That’s the deadline for a contribution to a traditional IRA, deductible or not, and a Roth IRA.  However, if you have a Keogh or SEP and you get a filing extension to October 17, 2017, you can wait until then to put 2016 money into those accounts.

June 15, 2017:  2nd Quarter 2017 Estimated Tax Payment Due  If you are self-employed or have other second-quarter income that requires you to to pay quarterly estimated taxes, make sure your payment is postmarked by June 15, 2017. 

September 15, 2017: 3rd Quarter 2017 Estimated Tax Payment Due  If you are self-employed or have other third-quarter income that requires you to pay quarterly estimated taxes, make sure your third quarter payment is postmarked by September 15, 2017. 

October 17, 2017:  Extended Individual Tax Returns Due  If you got a filing extension on your 2016 tax return, you need to get it completed and postmarked by October 17, 2017.

ALSO due October 17, 2017:  Last Chance to Recharacterize 2016 Roth IRA Conversion  If you converted a traditional IRA to a Roth during 2016 and paid tax on the conversion with your 2016 return, October 17, 2017 is the deadline for recharacterizing (undoing) the conversion.  Doing so could save you money if the IRA has lost money since the time of the original conversion.

January 15, 2018:  4th Quarter 2017 Estimated Tax Payment Due  If you are self-employed or have other fourth-quarter income that requires you to pay quarterly estimated taxes, get them postmarked by January 15, 2018.

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