The Tax Foundation recently examined the IRS’s updated tax brackets for 2017. The IRS adjusts more than 40 tax provisions every year, the Tax Foundation reports.
“This is done to prevent what is called ‘bracket creep,’” Kyle Pomerleau wrote for the Tax Foundation.” This is the phenomenon under which people are pushed into higher income tax brackets or have reduced value from credits or deductions due to inflation, instead of any increase in real income.
The Consumer Price Index increased 1.7% over the past 12 months, the Bureau of Labor Statistics announced in mid-December. Although inflation is still below 2%, the Federal Reserve stated in a press release that it expects to reach that target over the medium term as the effects of a decline in energy and import prices taper off, and the labor market strengthens. The Fed decided to raise the federal funds rate to between 0.50% and 0.75% at its FOMC meeting in mid-December.
The following pages show the new tax brackets and thresholds for 2017.
Single, Married and Head of Household Brackets
The IRS made adjustments for each income bracket in 2017.
Standard Deduction and Personal Exemption
Standard deductions increased slightly, while the personal exemption is unchanged from the 2016 level.
PEP and Pease
Taxpayers who earn more than the income limits listed below won’t benefit from itemized deductions, thanks to the Pease limitations, which apply to deductions for charitable donations, business expenses, interest and taxes paid, and other miscellaneous deductions.
Related: 15 Most Overlooked Tax Deductions
Alternative Minimum Tax
Taxpayers who report more than $187,800 of alternative minimum taxable income in 2017 will be taxed at the 28% AMT rate, the Tax Foundation reports.
Earned Income Tax Credit (EIC or EITC)
Trusts and Estate Taxes