2015 Tax Rates, Standard Deductions, Personal Exemptions, Credit Amounts & More
With tax season firmly behind us (er, for those of you who didn't file for extension), now is a good time to take a look at your current financial picture and check to see how it squares against the 2015 tax rates, adjustments and other tax items. If you aren't expecting any significant changes, you can use the updated tax tables to estimate your liability for the 2015 tax year. If, however, you are expecting to make more money, get married, buy a house, have a baby or other life change, you'll want to consider adjusting your withholding or tweaking your estimated tax payments.
To help you out, I've attached the 2015 tax rates and more below. Last fall, the Internal Revenue Service (IRS) announced the annual inflation adjustments for a number of provisions for the year 2015, including tax rate schedules, tax tables and cost-of-living adjustments for certain tax items effective January 1, 2015. This is the information that you'll use to prepare your 2015 tax returns in 2016.
The tax rates for 2015 are as follows:
You can see how the rates for 2015 compare to the 2014 brackets here.
The standard deduction amounts for 2015 are as follows:
For those taxpayers who itemize their deductions, the Pease limitations, named after former Rep. Don Pease (D-OH) may cap or phase out certain deductions for high income taxpayers. The Pease thresholds for 2015 are:
If the Pease limitations apply, the total of all your itemized deductions is reduced by the lesser of:
- 3% of AGI above the applicable threshold; or
- 80% of the amount of itemized deductions otherwise allowable for the tax year.
Pease limitations apply to charitable donations, the home mortgage interest deduction, state and local tax deductions and miscellaneous itemized deductions. They do not apply to medical expenses, investment expenses, gambling losses and certain theft and casualty losses.
(You can read more about the Pease limitations and how they affect affluent taxpayers here.)
Keep in mind that the floor for medical expenses remains 10% of adjusted gross income (AGI) for most taxpayers. Taxpayers over the age of 65 may still use the 7.5% through 2016.
The personal exemption amount for 2015 is $4,000, up from $3,950 in 2014. Phaseouts apply as follows:
In years past, the AMT was subject to a last minute scramble by Congress to "patch" the exemption but as part of the American Taxpayer Relief Act of 2012 (ATRA), the AMT exemption amounts are permanently adjusted for inflation – that's why you now see it in this list.
The Social Security Administration, not IRS, releases Social Security benefit and wage base information each year. For 2015, those amounts are:
The kiddie tax applies to unearned income for children under the age of 19 and college students under the age of 24. For 2015, the threshold for the kiddie tax – meaning the amount of unearned net income that a child can take home without paying any federal income tax – is $1,050. All unearned income in excess of $2,100 is taxed at the parent's tax rate.
Some tax credits are also adjusted for 2015. Some of the most common tax credits are:
- Earned Income Tax Credit (EITC). For 2015, the maximum EITC amount available is $3,359 for taxpayers filing jointly with one child; $5,548 for two children; $6,242 for three or more children (up from $6,143 in 2014) and $503 for no children. Phaseouts are based on filing status and number of children and begin at $8,240 for single taxpayers with no children and $18,110 for single taxpayers with one or more children.
- Child & Dependent Care Credit. For 2015, the value used to determine the amount of credit that may be refundable is $3,000 (the credit amount has not changed). Keep in mind that this is the value of the expenses used to determine the credit and not the actual amount of the credit.
- Adoption Credit. For 2015, the credit allowed for an adoption of a child with special needs is $13,400, and the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $13,400. Phaseouts do apply beginning at taxpayers with modified adjusted gross income (MAGI) in excess of $201,010 and completely phased out for taxpayers with MAGI of $241,010 or more.
- Hope Scholarship Credit. The Hope Scholarship Credit for 2015 will be an amount equal to 100% of qualified tuition and related expenses not in excess of $2,000 plus 25% of those expenses in excess of $2,000 but not in excess of $4,000. That means that the maximum Hope Scholarship Credit allowable for 2015 is $2,500. Income restrictions do apply and for 2015, those kick in for taxpayers with modified adjusted gross income (MAGI) in excess of $80,000 ($160,000 for a joint return).
- Lifetime Learning Credit. As with the Hope Scholarship Credit, income restrictions apply to the Lifetime Learning Credit. For 2015, those restrictions begin with taxpayers with modified adjusted gross income (MAGI) in excess of $55,000 ($110,000 for a joint return).
Changes were also made to certain tax Deductions, deferrals & exclusionsfor 2015. You'll find some of the most common here:
- Student Loan Interest Deduction. For 2015, the maximum amount that you can take as a deduction for interest paid on student loans remains at $2,500. Phaseouts apply for taxpayers with modified adjusted gross income (MAGI) in excess of $65,000 ($130,000 for joint returns), and is completely phased out for taxpayers with modified adjusted gross income (MAGI) of $80,000 or more ($160,000 or more for joint returns).
- Foreign Earned Income Exclusion. For 2015, the foreign earned income exclusion finally hits six figures: it's now $100,800, up from $99,200 for 2014.
- Flexible Spending Accounts. The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending accounts (FSA) edges up to $2,550 for 2015 (up from $2,500).
- Elective Contribution Limits. The elective deferral limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan increased from $17,500 in 2014 to $18,000 in 2015. The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan is increased from $5,500 in 2014 to $6,000 in 2015.
- IRA Contributions. The limit on annual contributions to an Individual RetirementArrangement (IRA) remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over remains at $1,000.
More cost-of-living and other adjustments are available through Revenue Procedure 2014-61.