According to
recent reports, the Internal Revenue Service or the IRS has accounted the annual
inflation adjustments for a number of provisions for the year 2015, including
tax tables, tax rate schedules and cost-of-living adjustments for certain tax
items. The changes will be applicable numbers for the tax yea 2015, in other
words it will be effective from 1st January, 2015. They will not be
the numbers and rates that you’ll use to prepare your 2014 tax returns in 2015.
Instead, these numbers and rates (the changed ones) are those that you will use
to prepare your 2015 tax returns in 2016. Did you get it? Good! Now let’s have
a look at the changes.
In this article
we’ll continue the approach that we’ve taken in the past to discuss the
significant and potential tax changes in 2014-2015. That discussion will
include changes to the Social Security and Medicare, mileage deduction rates,
tax standard deduction rates, earned income credits, Hope and Lifetime Learning
tax credits and changes to the retirement accounts like the 401(k), IRAs and
Roth plans.
Individual tax payers
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If the taxable income is between:
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Then the tax due is:
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0 - $9,225
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10% of the taxable income
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$9,226 - $37,450
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$922.50 + 15% of the amount over
$9,225
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$37,451 - $90,750
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$5,156.25 + 25% of the amount over
$37,450
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$90,751 - $189,300
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$18,481.25 +28% of the amount over
$90,750
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$189,301- $411,500
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$46,075.25 + 33% of the amount over
$189,300
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$411,501 - $413,200
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$119,401.25 + 35% of the amount over
$411,500
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$413,201 and above
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$119,996.25 + 39.6% of the amount over
$413,200
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Standard deductions: All taxpayers will now see a slight
increase in the standard deduction. The standard deduction rises to $6300 for
singles and the married couples filing seperate returns and $12,600 for married
couples who are filing jointly, up from $6200 and $12,400 respectively for the
tax year 2014. The standard deduction for heads of household rises to $9240 up
from $9100.
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Filing Status
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Standard Deduction Amount
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Single
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$6300
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Married filing jointly
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$12,600
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Married filing separately
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$6300
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Head of Household
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$9250
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Surviving Spouse
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$12,600
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Itemized deductions: There are limitations for itemized
deductions too – The pease limitations, which has been named after former Rep.
Don Pease – for 2015 will be introduced for individuals with incomes of
$258,250 or more. The Pease Limitations were slated to be reduced from the
beginning of 2006 and then it was eliminated in 2010; as with other tax cuts,
the elimination was then extended throughout the end of 2012. The limitations
were then brought back in 2013 according to the original threshlds, indexed for
inflation. The particular result of those changes is basically an increase in
the top marginal tax rates.
Therefore, if
you’re wondering about taking out a huge loan for some big purchase, you should
be considered about the taxes. Take into account the above mentioned tax
changes that are to be introduced in 2015 so that you can measure and weigh
your decisions in the near future.