Useful Income Tax and Retirement Planning Information

There have been several tax law changes over the past few years with staggered effective dates, that may change the way you consider your financial situation—especially retirement planning.

Income Tax Rate Schedules for 2015

2015 Single Return Rate Schedule2015 Married Filing Jointly Rate Schedule
Taxable Income LevelsTax RateTaxable Income LevelsTax Rate
0 to $9,225 10% 0 to $18,450 10%
$9,226 to $37,450 15% $18,451 to $74,900 15%
$37,451 to $90,750 25% $74,901 to $151,200 25%
$90,751 to $189,300 28% $151,201 to $230,450 28%
$189,301 to $411,500 33% $230,451 to $411,500 33%
$411,501 to $413,200 35% $411,501 to $464,850 35%
Over $413,200 39.6% Over $464,850 39.6%

Income Tax Rate Schedules for 2016

2016 Single Return Rate Schedule2016 Married Filing Jointly Rate Schedule
Taxable Income LevelsTax RateTaxable Income LevelsTax Rate
0 to $9,275 10% 0 to $18,550 10%
$9,276 to $37,650 15% $18,551 to $75,300 15%
$37,651 to $91,150 25% $75,301 to $151,900 25%
$91,151 to $190,150 28% $151,901 to $231,450 28%
$190,151 to $413,350 33% $231,451 to $413,350 33%
$413,351 to $415,050 35% $413,351 to $466,950 35%
Over $415,050 39.6% Over $466,950 39.6%

2015 Standard Deduction2016 Standard Deduction
Married couples filing a joint return - $12,600 Married couples filing a joint return - $12,600
Single return filers - $6,300 Single return filers - $6,300

2015 Personal Exemption Amount2016 Personal Exemption Amount
$4,000 $4,050

2015 and 2016 Taxation of Dividends and Long Term Capital Gains

For taxpayers in the 10% and 15% brackets, qualifying dividends and long term capital gains (assets held for more than a year) will be taxed at 0%. For those in 25%, 28%, 33% and 35% tax brackets, the tax rate on dividends and long term capital gains is 15%. For those in the top 39.6% bracket, the tax rate is 20%.

2015 and 2016 Medicare Surtaxes

As part of the health care reform enacted in 2010, additional Medicare surtaxes apply to high income wage earners and high income investors. The surtaxes apply when a single taxpayer's Modified Adjusted Gross Income (MAGI) exceeds a threshold of $200,000 or joint return filers when their MAGI exceed $250,000.

  • For wage earners, an additional 0.9% Medicare surtax applies to wages (including bonuses and self-employment income) above the threshold amounts.
  • For investors, an additional 3.8% Medicare surtax applies to net investment income (taxable interest, dividends, capital gains, etc.) in excess of the thresholds.

Estate Taxes

YearEstate Size Where Taxation StartsTop Estate Tax Rate
Year

2015

Estate Size Where Taxation Starts

$5,430,000

Top Estate Tax Rate

40%

Year

2016

Estate Size Where Taxation Starts

$5,450,000

Top Estate Tax Rate

40%

Year

2017

Estate Size Where Taxation Starts

Indexed for inflation

Top Estate Tax Rate

40%

Regular IRA and Roth IRA Contribution Limits

For Tax Year

IRA Contribution Limit

Additional Contribution Limits for Those Age 50 or Over

For Tax Year

2015

IRA Contribution Limit

$5,500

Additional Contribution Limits for Those Age 50 or Over

$1,000

For Tax Year

2016

IRA Contribution Limit

$5,500

Additional Contribution Limits for Those Age 50 or Over

$1,000

401(k) Retirement Plan Contribution Limits

For Tax Year

401(k) Deferral Limit

Additional Contribution Limits for Those Age 50 or Over

For Tax Year

2015

401(k) Deferral Limit

$18,000

Additional Contribution Limits for Those Age 50 or Over

$6,000

For Tax Year

2016

401(k) Deferral Limit

$18,000

Additional Contribution Limits for Those Age 50 or Over

$6,000

Education (or Coverdell) IRAs

For 2015 and 2016, the annual contribution limit is $2000 with eligibility phase out beginning at $190,000 (for married filing jointly) and $95,000 of Adjusted Gross Income (some modifications apply).

Annual Gift Tax Exclusion

For 2015 and 2016, gifts of $14,000 and under are not subject to gift tax.

2015 Payroll Taxes—Social Security and Medicare

2015 Employee wages subject to Social Security tax of 6.2% – $118,500.
2015 Employee wages subject to Medicare tax of 1.45% on all wages and an additional 0.9% on wages above $200,000 for taxpayers filing single returns. For taxpayers filing joint returns, the additional 0.9% applies to wages above $250,000.

2015 Self employment income subject to Social Security tax of 12.4% – $118,500.
2015 Self employment income subject to Medicare tax of 2.9% on all self-employment income and an additional 0.9% on wages above $200,000 for taxpayers filing single returns. For taxpayers filing joint returns, the additional 0.9% applies to wages above $250,000.

2015 Social Security Benefits

2015 Average monthly benefit for all retired workers – $1,328.
2015 Average monthly benefit for retired couples – $2,176.
2015 Maximum monthly benefit for a worker at full retirement age – $2,663.

2016 Payroll Taxes—Social Security and Medicare

2016 Employee wages subject to Social Security tax of 6.2% – $118,500.
2016 Employee wages subject to Medicare tax of 1.45% on all wages and an additional 0.9% on wages above $200,000 for taxpayers filing single returns. For taxpayers filing joint returns, the additional 0.9% applies to wages above $250,000.

2016 Self employment income subject to Social Security tax of 12.4% – $118,500.
2016 Self employment income subject to Medicare tax of 2.9% on all self-employment income and an additional 0.9% on wages above $200,000 for taxpayers filing single returns. For taxpayers filing joint returns, the additional 0.9% applies to wages above $250,000.

2016 Social Security Benefits

2016 Average monthly benefit for all retired workers – $1,341.
2016 Average monthly benefit for retired couples – $2,212.
2016 Maximum monthly benefit for a worker at full retirement age – $2,639.

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