In October, the IRS announced the 2015 amounts in the Internal Revenue Code (the IRC or the Code) that are subject to annual inflation adjustments. The most significant changes for high-income taxpayers include:
- Tax rates. A married couple filing a joint return will not reach the highest marginal rate of 39.6 percent until their taxable income reaches $464,850 (compared to $457,600 in 2014). For unmarried individuals, the maximum rate is reached at $413,200 (compared to $406,750 in 2014). Trusts and estates will reach the maximum rate at $12,300 (compared to $12,150 in 2014).
- Personal exemption and itemized deduction phaseout. Married taxpayers will begin to lose their personal exemption deductions and have their itemized deductions scaled back when their adjusted gross income reaches $309,900 (compared to $305,080 in 2014). For unmarried individuals the phaseouts begin at an adjusted gross income of $258,250 (compared to $254,200 in 2014). As in the past, a taxpayer cannot lose more than 80 percent of his itemized deductions.
- Estate, gift and generation-skipping transfer tax exemption. The lifetime exemption against these transfer taxes will increase by $90,000, from $5,340,000 to $5,430,000. Taxpayers who have previously used their maximum exemption amounts can now give additional gifts of up to $90,000 without incurring transfer taxes.
- Annual exclusion amount for gifts. The annual exclusion for present interest gifts to an unlimited number of donors will remain at its current level of $14,000.