Selected 2016 Inflation-Indexed Figures

Many contribution and deduction amounts in the tax law are indexed for inflation.  Many also have statutory adjustments.  While there remains uncertainty about whether Congress will enact the “extenders” legislation before the end of 2015, some important 2016 inflation-adjusted figures have been released and are as follows: 

1.      The top 39.6% ordinary income and 20% long-term capital gain tax rates apply when taxable income exceeds $466,950 for joint filers (up from $464,850 in 2015) and $415,050 for single filers (up from $413,200 in 2015).  For trusts and estates, the top rates apply when taxable income exceeds $12,400 (up from $12,300 in 2015).

2.      Itemized deductions and personal exemptions begin to “phase-out” once adjusted gross income exceeds $311,300 for joint filers (up from $309,900 in 2015) and $259,400 for single filers (up from $258,250 in 2015).  These phase-outs do not apply to trusts and estates.

3.      The personal exemption is $4,050 (up from $4,000 in 2015).

4.      The contribution amount for traditional and Roth IRAs remains $5,500 (the same as in 2015).  For those who are age 50 and older, the additional “catch-up” contribution is $1,000 and is not indexed for inflation.

5.      The modified adjusted gross income phase-out range for contributions to Roth IRAs is from $184,000 to $194,000 for joint filers (up from between $183,000 and $193,000 in 2015); and from $117,000 to $132,000 for single filers (up from $116,000 and $131,000 in 2015).

6.      The contribution amount for traditional and Roth 401(k) accounts remains $18,000 (the same as in 2015).  For those who are age 50 and older, the additional “catch-up” contribution remains $6,000 (the same as in 2015).

7.      The limit on the annual additions to a participant's defined contribution account remains $53,000 (the same as in 2015).

8.      The annual exclusion from gift tax remains $14,000 per donee (the same as in 2015).

9.      The lifetime exemption from estate, gift, and generation-skipping transfer taxes increases to $5,450,000 (up from $5,430,000 in 2015).

10.   The Social Security tax wage base remains $118,500 (the same as in 2015).

11.   The maximum annual contribution to a health savings account remains $3,350 (the same as in 2015) for an individual-coverage-only health plan, and $6,750 (up from $6,650 in 2015) for a family-coverage health plan.  For employees age 55 and older, the additional HSA "catch-up" contribution is $1,000 and is not indexed for inflation.