Every year, the Internal Revenue Service announces cost-of-living adjustments that affect contribution limits for retirement plans, thresholds for deductions and credits, and standard deduction and personal exemption amounts.
Here are a few of the key adjustments for 2017.
Retirement plans
- Employees who participate in 401(k), 403(b), and most 457 plans can defer up to $18,000 in compensation in 2017 (the same as in 2016); employees age 50 and older can defer up to an additional $6,000 in 2017 (the same as in 2016).
- Employees participating in a SIMPLE retirement plan can defer up to $12,500 in 2017 (the same as in 2016), and employees age 50 and older will be able to defer up to an additional $3,000 in 2017 (the same as in 2016).
IRAs
The limit on annual contributions to an IRA remains unchanged at $5,500 in 2017, with individuals age 50 and older able to contribute an additional $1,000. For individuals who are covered by a workplace retirement plan, the deduction for contributions to a traditional IRA is phased out for the following modified adjusted gross income (AGI) ranges:
| 2016 | 2017 | |
|
Single/head |
$61,000- $71,000 |
$62,000 – $72,000 |
|
Married |
$98,000- $118,000 |
$99,000- $119,000 |
|
Married |
$0- $10,000 |
$0- $10,000 |
Note: The 2017 phaseout range is $186,000 -$196,000 (up from $184,000- $194,000 in 2016) when the individual making the IRA contribution is not covered by a workplace retirement plan but is filing jointly with a spouse who is covered.
The modified AGI phaseout ranges for individuals making contributions to a Roth IRA are:
| 2016 | 2017 | |
|
Single/HOH |
$117,000- $132,000 |
$118,000- $133,000 |
|
MFJ |
$184,000- $194,000 |
$186,000- $196,000 |
|
MFS |
$0- $10,000 |
$0- $10,000 |
Estate and gift tax
- The annual gift tax exclusion remains at $14,000.
- The gift and estate tax basic exclusion amount for 2017 is $5,490,000, up from $5,450,000 in 2016.
Personal exemption
The personal exemption amount remains at $4,050. For 2017, personal exemptions begin to phase out once AGI exceeds $261,500 (single), $287,650 (HOH), $313,800 (MFJ), or $156,900 (MFS).
Note: These same AG/ thresholds apply in determining if itemized deductions may be limited. The corresponding 2016 threshold amounts were $259,400 (single), $285,350 (HOH), $311,300 (MFJ), and $155,650 (MFS).
Standard deduction
These amounts have been adjusted as follows:
| 2016 | 2017 | |
|
Single |
$6,300 | $6,350 |
|
HOH |
$9,300 | $9,350 |
|
MFJ |
$12,600 | $12,700 |
|
MFS |
$6,300 | $6,350 |
Note: The 2016 and 2017 additional standard deduction amount (age 65 or older, or blind) is $1,550 for single/HOH or $1,250 for all other filing statuses. Special rules apply if you can be claimed as a dependent by another taxpayer.
Alternative minimum tax (AMT)
AMT amounts have been adjusted as follows:
| 2016 | 2017 | |
|
Maximum AMT exemption amount |
||
|
Single/HOH |
$53,900 | $54,300 |
|
MFJ |
$83,800 | $84,500 |
|
MFS |
$41,900 | $42,250 |
|
Exemption phaseout threshold |
||
|
Single/HOH |
$119,700 | $120,700 |
|
MFJ |
$159,700 | $160,900 |
|
MFS |
$79,850 | $80,450 |
|
26% on AMTI* up to this amount, 28% on AMTI above this amount |
||
|
MFS |
$93,150 | $93,900 |
|
All others |
$186,300 | $187,800 |
| *Alternative minimum taxable income | ||
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Cambridge Investment Group, Inc. is a privately-controlled firm with a national reach across the financial services industry consisting of multiple broker-dealers and RIAs, including Cambridge Investment Research Advisors, Inc. – a large corporate RIA; and Continuity Partners Group, LLC – a special purpose broker-dealer and registered investment advisor; and Cambridge Investment Research, Inc. – an independent broker-dealer, member FINRA/SIPC, that is among the largest privately-controlled independent broker-dealers in the country supporting approximately 3,000 independent financial professionals nationwide who serve their clients as registered representatives and investment advisor representatives, choosing to use either Cambridge’s firm Registered Investment Adviser or their own. For more information visit www.joincambridge.com.
IMPORTANT DISCLOSURES
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.
