Even though you will not file your 2016 income taxes for more than a year, the adjustments to tax rates and deduction amounts may have some impact on your financial planning in the year ahead.
Let’s take a look at three distinct changes taxpayers can expect from the IRS for tax year 2016.
Higher Deductions for Long-term Care Premiums
One of the biggest changes for 2016 income taxes is the increased deduction available for taxpayers with eligible long-term care insurance. The group that will see the highest increase: purchasers in their 40s.
Increased Income for Tax Brackets
The income limits for married individuals filing joint returns and surviving spouses increases for 2016. For example, the taxable income for the top bracket is $466,950 or greater, up from $464,850+ in 2015. These amounts reflect the low inflation rate of 2015.
Increased Estate Tax Exclusion
Among the changes for 2016 tax rates is the increased basic exclusion amount for estates of decedents who die during 2016. The updated exclusion amount is $5.450 million, up from a total of $5.430 million for estates of decedents who died in 2015.
Of course, these are not the only tax rate and deduction changes for 2016. There are more than 50 tax provisions for tax year 2016, which can be found in the IRS Revenue Procedure 2015-53.
To help you understand how these changes could affect your financial plan, Guidant Wealth Advisors offers a senior staff of advisors and wealth managers who can explain the upcoming adjustments and their possible implications on budgets, spending and savings.