Indexed Tax Rates, Deductions, Exclusions, Exemptions and Credits

Note:  Due to indexing of various tax variables to keep up with inflation and to the practice of phasing in the introduction of new tax laws or phasing out the elimination of older tax  laws, there is a continuous process of change in the following tax variables such as the standard deduction,  exemption amounts and other deductions or credits. The following tabulation is based on a variety of sources as of January 27, 2004 and reflects the changes introduced by the Jobs and Growth Tax Relief Reconciliation Act of 2003 and Revenue Procedure 2003-85. This tabulation is not represented as including all tax variables that change from year to year.  Amounts shown after 2004are based on amounts that are phased in or out.  Blank cells are not yet known.  (Vernon K. Jacbobs)
 

Variable Tax Amounts

2003
 

 2004 2005 2006

 
 
 
 
 
Standard Deduction
 
 
 
 
- single (Not head of household or a surviving spouse) 4,750
 		 4,850    
- Married filing jointly & surviving spouse 9500 9,700
 
 
 
- head of household 7,000
 		 7,150
 
 
 
- married filing separately 4,750 4,850
 
 
 
- additional amount for those over age 65 or blind and married 950
 		 950
 
 
 
- additional amount for those over age 65 or blind and single 1,150
 		 1,200
 
 
 
- dependents' standard deduction (or = earned income + 250 if greater)
 		 750
 		 800

 
 
 

 
 
 
 
 
Base adjusted gross income at which some deductions are phased out:
 
 
 
 
--- single, head of household, married filing jointly 139,500
 		 142,700
 
 
 
--- married filing separately 69,750
 		 71,350
 
 
 

 
 
 
 
 
Personal Exemption
 
 
 
 
- Deduction for each personal exemption or dependent 3,050
 		 3,100
 
 
 
- Estate exemption
 		 600
 		 600
 
 
 
- Simple trust exemption
 		 300
 		 300
 
 
 
- Complex trust exemption
 		 100
 		 100
 
 
 

 
 
 
 
 
Base adjusted gross income for phaseout of exemption:
 
 
 
 
--- single 139,500
 		 142,700
 
 
 
--- head of household 174,000
 		 178,350
 
 
 
--- married filing jointly 209,250
 		 214,050
 
 
 
--- married filing separatley 104,625
 		 107,025
 
 
 

 
 
 
 
 
Itemized Deduction Exclusions
 
 
 
 
 
 - Percent of AGI for medical expense exclusion
 		 7.5%
 		 7.5%
 
 
 
 - Percent of AGI for miscellaneous itemized deduction exclusion
 		 2%
 		 2%
 
 
 
 - Percent of AGI for casualty loss deduction exclusion
 		 10%
 		 10%
 
 
 

 
 
 
 
 
Maximum child tax credit
 		 $1,000
 		 $1,000
 		 $700
 		 $800
 

 
 
 
 
 
Long Term Capital Gain Maximum Tax Rates
 
 
 
 
 

 
 
 
 
 
--- for taxpayers above the 15% tax bracket
 		 20% / 15% *
 		 15%
 		 15%
 		 15%
 
--- for taxpayers in the 15%or lower tax bracket
 		 10% /
5% *
 		 15%
 		 15% 15%
- Recaptured depreciation on real estate held more than 12 months
 		 25%
 		 25%
 		 25%
 		 25%
 
- Gain on collectibles held more than 12 months
 		 28%
 		 28%
 		 28%
 		 28%
 
 * Amounts in bold apply after 5/5/2003
 
 
 
 
 

 
 
 
 
 
Maximum Rate on Dividends
 
 
 
 
 
 - For taxpayers in or below the 15% tax bracket
 		 5%
 		 5% 5%
 		 5%
 
 - For taxpayer in brackets over 15%
 		 15%
 		 15% 15% 15%
Alternative Minimum Tax Exemption
 
 
 
 
 
 - Single and Head Household 40,250 40,250
 		 33,750
 		 ???
 
 - Married filing Joint returns
 		 58,000 58,000
 		 45,000
 		 ???
 
 - Married filing separate
 		 29,000
 		 29,000
 		 22,500
 		 ???
 

 
 
 
 
 
Education Credit and Deduction Limits
 
 
 
 
 
 - Maximum HOPE scholarship credit
 		 1,000 +
50% of excess
 		 1,000 +
50% of excess
 
 
 - Maximum Lifetime Learning credit
 		 1,000
 		 1,000
 
 
 
 - Maximum student loan interest deduction
 		 2,500
 		 2,500
 
 
 
 - Deduction for higher education expenses
 		 3,000
 		 3,000
 
 
 
 - Maximum employer education deduction per employee
 		 5,250
 		 5,250
 
 
 
 - Education IRA deduction limit
 		 2,000
 		 2,000
 
 
 
 - Education IRA maximum AGI for full deduction
 
 
 
 
 
 --- single and head of household and MFS
 		 95,000
 		 95,000
 
 
 
 --- joint returns
 		 190,000
 		 190,000
 
 
 

 
 
 
 
 
Social Security & Payroll Tax Amounts
 
 
 
 
- maximum earnings subject to FICA tax 87,000
 		 87,900
 
 
 
- employee or employer FICA tax rate 6.2%
 		 6.2%
 
 
- employee plus employer FICA tax rate and self employed rate 14.4%
 		 14.4%
 
 
- medicare tax rate for employee or employer 1.45%
 		 1.45%
 
 
 
- medicare tax rate for employee and employer & self employed 2.9%
 		 2.9%
 
 
 
- combined FICA & medicare tax rate for employee or employer 7.65%
 		 7.65%
 
 
 
- combined FICA & medicare tax rate for employer plus employer or S.E. 15.3%
 		 15.3%
 
 
 
- wages subject to federal unemployment taxes 7,000
 		 7,000
 
 
 
- federal and state unemployment rate 6.2%
 		 6.2%
 
 
 

 
 
 
 
 
Pension & IRA Limitation Amounts
 
 
 
 
- maximum benefit from defined benefit plan 160,000
 		 165,000
 
 
 
- maximum contribution to a defined contribution plan or Keogh 40,000
 		 41,000
 
 
 
- maximum 401(k) and 402(g) elective deferral 12,000
 		 13,000
 		 14,000
 		 15,000
 
- minimum earnings of a highly compensated employee 90,000
 		 90,000
 
 
 
- section 401(k) maximum compensation limit 200,000
 		 205,000
 
 
 
- 414(v)(2)(B) catch up for taxpayers over 50
 		 2,000
 		 3,000
 		 4,000
 		 5,000
 
- 401(k)(11) catchup for taxpayers over age 50
 		 1,000
 		 1,500
 		 2,000
 		 2,500
 
- SIMPLE retirement account compensation limit 8,000
 		 9,000
 		 10,000
 		 10,000
 
- Maximum percent of compensation
 		 100%
 		 100%
 
 
 
- Maximum SEP contribution
 		 40,000
 		 40,000
 
 
 
- IRA deduction limit 3,000
 		 3,000
 		 4,000
 		 4,000
 
- IRA catch-up if over 50 years of age
 		 500
 		 500
 		 500
 		 1,000
 
- Regular IRA maximum AGI for full deduction (with Employer Plan)
 
 
 
 
 
--- single taxpayers and head of household
 		 40,000
 		 45,000
 		 50,000
 		 50,000
 
--- joint return
 		 60,000
 		 65,000
 		 70,000
 		 75,000
 
--- joint where spouse is included in employer plan
 		 150,000
 		 150,000
 		 150,000
 		 150,000
 
- Roth IRA Maximum AGI for full deduction
 
 
 
 
 
--- single and head of household
 		 95,000
 		 95,000 95,000 95,000
--- joint return
 		 150,000
 		 150,000 150,000 150,000

 
 
 
 
 
Transportation Deduction Limitations
 
 
 
 
- business mileage allowance including depreciation $.36
 		 $.375
 
 
 
- business mileage allowance without depreciation $.20 $.215
 
 
 
- charitable mileage allowance $.14
 		 $.14
 
 
 
- medical and relocation mileage allowance $.12
 		 $.14
 
 
 
- maximum employer paid tax free parking (monthly) $190
 		 $195
 
 
 

 
 
 
 
 
Exclusion for Gain on Personal Residence (per taxpayer)
 		 250,000
 		 250,000
 
 
 
Foreign Earned Income Exclusion 80,000
 		 80,000
 
 
 
Section 179 Equipment Expense Deduction 100,000 100,000
 
 
 
Self Employed Health Insurance Deduction percentage 100%
 		 100%
 
 
 
Threshold at which earnings do not reduce Social Security (under 65)
 		 11,520
 		 11,640
 
 
 
Social security reduction for excess earnings (under 65)
 		 50%
 		 50%
 
 
 

 
 
 
 
 
Estate and Gift Taxes
 
 
 
 
 
 - Unified credit exemption equivalent amount
 		 1,000,000
 		 1,500,000
 		 1,500,000
 		 2,000,000
 
 - Annual gift tax exclusion for gifts of a present interest
 		 11,000
 		 11,000
 
 
 
 - Family owned business deduction maximum
 		 675,000
 		 repealed
 
 
 
 - Maximum estate and gift tax rate (including 5% surtax rate)
 		 49%
 		 48%
 		 47%
 		 46%
 
 - Gift tax exclusion for non citizen spouses
 		 112,000
 		 114,000
 
 
 
 - Disclosure of gifts from foreign persons (IRC 6039F)
 		 11,827
 		 12,097
 
 
 
Corporate Tax Variables
 
 
 
 
 
 - Tax rate on personal holding company income
 		 15%
 		 15% 15% 15%
 - Accumulated earnings tax (accumulations > $250,000)
 		 15% 15% 15% 15%

 
 
 
 
 
Expatriation - Net Worth threshhold
 		 608,000
 		 622,000
 
 
 
Expatriation - Average tax paid 122,000
 		 124,000
 
 
 

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