Each year the IRS updates some key numbers. Most are a product of the prior year’s inflation, all are near and dear to anyone having any interest in the tax process. Let’s look at what recently hit the wire from my friends at the IRS. (If I’ve not already made it clear, my use of the word friends is not sarcastic. The folk at the IRS do not create the tax code, they just enforce it. It’s congress that’s responsible for the tax regulations, as crazy as they appear.) Now, for the new numbers:
- A personal exemption is now $3,800, up $100 from 2011
- The standard deduction is now $5,950 for singles, $11,900 for married filing joint. Up $150/$300 respectively.
- Tax bracket thresholds have been adjusted, so, for instance, the 15% bracket for married filing joint now ends at $70,700 up from $69,000.
- The gift tax exclusion remains at $13,000 but the estate tax amount has increased to $5,120,000.
That’s just the tax side, on the retirement side we have some changes as well:
- Participant in 401(k), 403(b), 457 plans, and the Government TSP is increased to $17,000 from $16,500
- No change in the catch-up contribution of $5,500 for those 50 or older.
- For those covered by a retirement plan at work, the IRA deductibility is phased out over the range of $58,000 – $68,000 for singles or $92,000 – $112,000 for married filing joint.
- The Roth IRA phase-out occurs from $110,000 – $125,000 for single and $173,000 – $183,000 for married filing joint.