NCPA - National Center for Policy Analysis

2015 Tax Rates, Brackets & Exemption Amounts May Save Taxpayers Money

September 22, 2014

The U.S. Bureau of Labor Statistics (BLS) reported that the consumer price index (CPI) dropped unexpectedly 0.2 percent. The CPI measures the cost of goods and services and when it doesn't change, it signals that interest rates will stay put.

The Tax Code provides for mandatory adjustments to tax items based on inflation every year. Now, however, inflation adjustments are routinely included in tax legislation which can be tricky for taxpayers. So what does this mean for taxpayers and how does it translate to real life dollars?

  • Tax Brackets: Tax brackets will nudge upwards, meaning taxes should decreases for many taxpayers.
  • Personal Exemption: For high-income tax payers, the personal exemption deduction is phased out while everyone else will have the amount increased to $4,000 from $3,950.
  • Federal Estate Tax Exclusion: The federal estate tax exclusion for decedents dying in 2015 is projected to increase to $5.43 million and to $10.86 million for married couples.
  • Gift Tax Exclusion: The annual exclusion for federal gift tax will remain the same at $14,000.
  • Student Loan Interest Phaseouts: Phaseouts apply to the $2,500 deduction for student loan interest.

And finally, there are a few first time adjustments related to Obamacare:

  • The cap on contributions to health flexible spending accounts will be adjusted to $2,550.
  • The penalty imposed on employers that don't provide minimum coverage is $2,080 times the number of qualifying during the month.
  • The penalty on employers who offer coverage but have employees who qualify for premium tax credits is $3,120 times the number of individuals to which the premium tax credit of cost-sharing reduction is allowed or paid.
  • Finally, the penalty for maintaining minimal coverage is $325.

Source: Forbes, "2015 Tax Rates, Brackets & Exemption Amounts May Save Taxpayers Money," September 17, 2014.


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