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All About Tax Brackets, Deductions, and Exemptions for 2017

By Sean M. Hugo, CPA

More than 50 tax provisions, including the tax rate schedules and other tax changes are adjusted for inflation in 2017. Let's take a look at the ones most likely to affect taxpayers like you.

Tax Rates

The tax rate of 39.6 percent affects singles whose income exceeds $418,400 ($470,700 for married taxpayers filing a joint return), up from $415,050 and $466,950, respectively. The other marginal rates--10, 15, 25, 28, 33 and 35 percent--and related income tax thresholds--are found at IRS.gov.

The Standard Deduction

The standard deduction remains at $6,350 for singles and married persons filing separate returns and $12,700 for married couples filing jointly. The standard deduction for heads of household rises to $9,350, up from $9,300 in 2016.

The limitation for itemized deductions to be claimed on tax year 2017 returns of individuals begins with incomes of $287,650 or more ($313,800 for married couples filing jointly).

The personal exemption for tax year 2017 remains at $4,050. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $261,500 ($313,800 for married couples filing jointly).

It phases out completely at $384,000 ($436,300 for married couples filing jointly.)

Alternative Minimum Tax Exemption

The Alternative Minimum Tax exemption amount for tax year 2017 is $54,300 and begins to phase out at $120,700 ($84,500, for married couples filing jointly for whom the exemption begins to phase out at $160,900).

The 2016 exemption amount was $53,900 ($83,800 for married couples filing jointly). For tax year 2017, the 28 percent tax rate applies to taxpayers with taxable incomes above $187,800 ($93,900 for married individuals filing separately).

Earned Income Credit 

For 2017, the maximum Earned Income Credit amount is $6,318 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,269 for tax year 2016. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phase-outs.

Other Miscellaneous Tax Deductions & Credits

  • Estates of descendants who die during 2017 have a basic exclusion amount of $5,490,000, up from a total of $5,450,000 for estates of decedents who died in 2016.
  • For 2017, the exclusion from tax on a gift to a spouse who is not a U.S. citizen is $149,000, up from $148,000 for 2016.
  • For tax year 2017, the foreign earned income exclusion is $102,100, up from $101,300 for tax year 2016.
  • The annual exclusion for gifts remains at $14,000 for 2017.
  • The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) increases to $2,600 up from $2,550 in 2016.

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 $26,200 for tax year 2017, up from $25,900 for 2016.

Need help with tax planning in 2017? Help is just a phone call away! Call us at (405) 759-2796 or schedule a free consultation online.