November 1, 2017
2018 Cost of Living and Inflation Adjustments
The Internal Revenue Service has announced new additions to the cost of living and inflation rate increases for several tax-related attributes for the 2018 year.
SUMMARY OF ADJUSTMENTS ANNOUNCED TO DATE
- The amounts that can be deducted by businesses under Section 179 will increase by $10,000 from $510,000 to $520,000. The limitation on Section 179-eligible property placed in service during the tax year will increase from $2,030,000 to $2,070,000.
- The personal exemption amount for individual income taxes increased from $4,050 to $4,150.
- The annual gift exclusion increased $1,000 from $14,000 to $15,000.
- Employer-provided fringe benefits for parking and transit increased to $260.
ADDITIONAL ITEMS THAT HAVE BEEN ADJUSTED FOR 2018
| 2018 Tax Brackets | |||||
|---|---|---|---|---|---|
| Rate | Single Filer | Head of Household | Joint Filer | Married Filing Separate | Trust and Estate |
| 10% | $1 – $9,525 | $1 – $13,600 | $1 – $19,050 | $1 – $9,525 | no 10% bracket |
| 15% | $9,526 – $38,700 | $13,601 – $51,850 | $19,051 – $77,400 | $9,526 – $38,700 | $1 – $2,600 |
| 25% | $38,701 – $93,700 | $51,851 – $133,850 | $77,401 – $156,150 | $38,701 – $78,075 | $2,601 – $6,100 |
| 28% | $93,701 – $195,450 | $133,851 – $216,700 | $156,151 – $237,950 | $78,076 – $118,975 | $6,101 – $9,300 |
| 33% | $195,451 – $424,950 | $216,701 – $424,950 | $237,951 – $424,950 | $118,976 – $212,475 | $9,301 – $12,700 |
| 35% | $424,951 – $426,700 | $424,951 – $453,350 | $424,951 – $480,050 | $212,476 – $240,025 | no 35% bracket |
| 39.6% | more than $426,700 | more than $453,350 | more than $480,050 | more than $240,025 | more than $12,700 |
| 2018 Deductions and Exemptions | |||
|---|---|---|---|
| Filing Status | Standard Deduction | Alternative Minimum Tax (AMT) Exemption | Personal Exemption Phase-Out |
| Single Filer | $6,500 | $55,400 | $266,700 – $389,200 |
| Head of Household | $9,550 | $55,400 | $293,350 – $415,850 |
| Married Filing Separate | $6,500 | $43,100 | $160,000 – $221,250 |
| Married Filing Jointly | $13,000 | $86,200 | $320,000 – $442,500 |
| Individual Retirement Account (IRA) Income Phase-Out Ranges | ||
|---|---|---|
| Filing Status | IRA Deductions Phase-Out | Applicability |
| Single Filer | $63,000 – $73,000 | When covered by workplace plans |
| Head of Household | $63,000 – $73,000 | When covered by workplace plans |
| Married Filing Jointly | $101,000 – $121,000 | When a contributing spouse is covered by a workplace plan |
| Married Filing Jointly | $189,000 – $199,000 | When the contributor’s spouse is covered by a workplace plan |
| ROTH IRA Income Phase-Out Ranges | |
|---|---|
| Filing Status | IRA Deductions Phase-Out |
| Single Filer | $120,000 – $135,000 |
| Head of Household | $120,000 – $135,000 |
| Married Filing Jointly | $189,000 – $199,000 |
| Pension Plan Limits | |
|---|---|
| Plan Type | Annual Limitation |
| Benefit Defined Benefit | $220,000 |
| Limit – Defined Contribution | $55,000 |
Should you have any questions about how the Cost of Living Adjustments might affect your planning or questions regarding new rates or thresholds, contact your Marcum Tax Advisor.
RESOURCES
The IRS has released a list of inflation adjustments within Rev. Proc. 2017-58 and Notice 2017-64.
