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Here's How Tax Rates and Brackets Will Change in 2016

Oct 21, 2015

On Wednesday the Internal Revenue Service announced new inflation-adjusted income brackets for the 2016 tax year.

The top tax rate of 39.6% now applies to single taxpayers earning more than $415,050 ($466,950 for married taxpayers filing jointly)—up from the 2015 thresholds of $413,200 and $464,850, respectively.

Here are the other major adjustments:

If you're single...

If your taxable income is...You owe...
$0-$9,27510% of your taxable income
$9,275-$37,650$927.50 + 15% of anything over $9,275
$37,650-$91,150$5,183.75 + 25% of anything over $37,650
$91,150-$190,150$18,558.75 + 28% of anything over $91,150
$190,150-$413,350$46,278.75 + 33% of anything over $190,150
$413,350-$415,050$119,934.75 + 35% of anything over $413,350
$415,050 and higher$120,529.75 + 39.6% of anything over $415,050

If you're married filing jointly or are a surviving spouse...

If your taxable income is...You owe...
$0-$18,55010% of your taxable income
$18,550-$75,300$1,855 + 15% of anything over $18,550
$75,300-$151,900$10,367.50 + 25% of anything over $75,300
$151,900-$231,450$29,517.50 + 28% of anything over $151,900
$231,450-$413,350$51,791.50 + 33% of anything over $231,450
$413,350-$466,950$111,818.50 + 35% of anything over $413,350
$466,950 and higher$130,578.50 + 39.6% of anything over $466,950

If you're a head of household...

If your taxable income is...You owe...
$0-$13,25010% of your taxable income
$13,250-$50,400$1,325 + 15% of anything over $13,250
$50,400-$130,150$6,897.50 + 25% of anything over $50,400
$130,150-$210,800$26,835 + 28% of anything over $130,150
$210,800-$413,350$49,417 + 33% of anything over $210,800
$413,350-$441,000$116,258.50 + 35% of anything over $413,350
$441,000 and higher$125,936 + 39.6% of anything over $441,000

Visit the IRS website for more details on 2016 tax rates, including the new thresholds for people married filing separately and for estates and trusts.

For 2016 the standard deduction for heads of household will also rise to $9,300 (up from $9,250 in 2015) but the other standard deduction amounts will remain the same: $6,300 for singles and $12,600 for married couples filing jointly.

Personal exemptions will be $4,050 in 2016, up from $4,000 in 2015. The Alternative Minimum Tax exemption amount in 2016 is $53,900 for singles and $83,800 for married couples filing jointly (up by $300 and $400, respectively, compared to 2015 exemptions).

Read More: Here Are 401(k) Contribution Limits for 2016

Other key changes include:

  • The maximum Earned Income Credit amount is $6,269 for taxpayers filing jointly who have 3 or more qualifying children in 2016, up from $6,242 for 2015.
  • The monthly limit for the transportation benefits remains $130 for transportation, but rises to $255 for qualified parking in 2016, up from $250 for tax year 2015.
  • The foreign earned income exclusion is $101,300 for 2016, up from $100,800 in 2015.
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