As it does every year at this time, the Internal Revenue Service has announced the new inflation and COLA adjustments for calendar year 2018.
I am in the process of preparing my annual “What’s New in Taxes for 2018” report. I will let you know when it is available. But I will identify some of the basic changes for you here.
For calendar year 2018 tax returns -
The Personal Exemption is $4,150 (up from $4,050).
The Standard Deduction Amounts are:
Single and Married Filing Separate= $6,500 (up from $6,350)
Head of Household = $9,550 (up from $9,350)
Married Filing Joint and Qualified Widow(er) = $13,000 (up from $12,700)
The Standard Deduction for a dependent remains the greater of (1) $1,050, or (2) the sum of $350 and the individual's earned income.
The additional Standard Deduction amount for the age 65 or older or blind is $1,300 (up from $1,250) for married individuals and $1,600 (up from $1,550) for Single and Head of Household.
The maximum IRA contribution and “catch-up” remains at $5,500 and $1,000.
The maximum employee contribution to a 401(k), 403(b), 457 and federal Thrift Savings Plan is $18,500 (up from $18,000). The “catch-up” contribution remains at $6,000.
The estate and gift tax exemption is $5.6 million (up from $5.49 million).
The annual gift exclusion amount is $15,000 (up from $14,000).
It is important to note that these numbers are for the tax law as it currently exists. Tax legislation may be passed by the end of the year that changes some or all of the above numbers.
Click here for the official IRS “Revenue Proclamation”.
To see the appropriate numbers for 2017 tax returns, click here.