November 1, 2017

2018 Cost of Living and Inflation Adjustments

Contributor Michael Schonig, Supervisor, Tax & Business Services

Related Service Tax & Business

2018 Cost of Living and Inflation Adjustments Tax & Business

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.