In 2015, the income limits for all brackets and all filers will be adjusted for inflation and will be as seen in Table 1. The top marginal income tax rate of 39.6 percent will hit taxpayers with taxable income of $413,200 and higher for single filers. and $464,850 and higher for married filers. Table 1. 2015 Taxable Income Brackets and Rates. Rate.
Estimated Income Tax Brackets and Rates In 2015, the income limits for all brackets and all filers will be adjusted for inflation and will be as seen in Table 1. The top marginal income tax rate of 39.6 percent will hit taxpayers with taxable income of $413,200 and higher for single filers and $464,850 and higher for married filers.
The personal exemption for 2015 be $4,000. Source: Author’s calculations. PEP and Pease are two provisions in the tax code that increase taxable income for high-income earners. PEP is the phaseout of the personal exemption and Pease (named after former Senator Donald Pease) reduces the value of most itemized deductions once
The top marginal income tax rate of 39.6 percent will hit taxpayers with taxable income of $413,200 and higher for single filers and $464,850 and higher for married filers. Source: Author’s calculations. The standard deduction will increase by $100 from $6,200 to $6,300 for singles (Table 2).
2015’s maximum Earned Income Tax Credit for singles, heads of households, and joint filers is $503 if the filer has no children (Table 6). For one child the credit is $3,359, two children is $5,548, and three or more children is $6,242.
The AMT exemption amount for 2015 is $53,600 for singles and $83,400 for married couple. filing jointly (Table 5).
The IRS uses the Consumer Price Index (CPI) to calculate the past year’s inflation and adjusts income thresholds, deduction amounts, and credit values accordingly. Rather than directly adjusting last year’s values for annual inflation, each provision is adjusted from a specified base year.
This is the phenomenon by which people are pushed into higher income tax brackets or have reduced value from credits or deductions due to inflation instead of an actual increase in real income.
Each tax parameter is adjusted for inflation by taking its base value (from legislation) and multiplying it by the current fiscal year’s average Consumer Price Index (CPI) and then dividing that by the base fiscal
multiplied by the average CPI for fiscal year 2014 (235.69) and then divided by the average CPI for fiscal year 2002 (178.68): $7,000 * (235.69/178.68) = $9233. This value is then rounded down to the nearest $25 to yield 2015’s 10 percent tax bracket
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.