Thus, Congress was forced to “patch” the AMT by raising the exemption amount to prevent middle class taxpayers from being hit by the tax as a result Since its creation in the 1960s, the Alternative Minimum Tax (AMT) has not been adjusted for inflation. 2015 Personal Exemption Phaseout Filing Status 2014 Pease Limitations on Itemized Deductions Filing Status The PEP phaseout will end at $380,750 for singles and $432,400įor couples filing jointly, meaning these taxpayers will no longer have a personal exemption. The income threshold for both PEP and Pease will be $258,250 for single filers and $309,900 for married filers (Tables 3 and 4). PEP is the phaseout of the personal exemption and Pease (named after former Senator Donald Pease) reduces the value of most itemized deductions onceĪ taxpayer’s adjusted gross income reaches a certain point.
2021 TAX BRACKETS HEAD OF HOUSEHOLD IRS CODE
PEP and Pease are two provisions in the tax code that increase taxable income for high-income earners. 2015 Standard Deduction and Personal Exemption Filing Status The personal exemption for 2015 be $4,000. For married couples filing jointly, it will increase by $200 from $12,400 to $12,600. The standard deduction will increase by $100 from $6,200 to $6,300 for singles (Table 2). Standard Deduction and Personal Exemption 2015 Taxable Income Brackets and Rates Rate The top marginal income tax rate of 39.6 percent will hit taxpayers with taxable income of $413,200 and higher for single filersĪnd $464,850 and higher for married filers.
In 2015, the income limits for all brackets and all filers will be adjusted for inflation and will be as seen in Table 1. For more information, see the methodology, below. Rather than directly adjusting last year’s values for annual inflation, each provision is adjusted from a specified base year. The IRS uses the Consumer Price Index (CPI) to calculate the past year’s inflation and adjusts income thresholds, deduction amounts, and credit values accordingly. This is done to prevent what is called “ bracket creep.” This is the phenomenon by which people are pushed into higher income tax brackets or have reduced value from credits or deductions due to inflation instead of an actual increase in real income. Every year, the IRS adjusts more than 40 tax provisions for inflation.
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