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IRS Issues 2018 Inflation-Adjusted Tax Tables

Each fall, the Internal Revenue Service announces adjustments to individual taxes, deductions and credits. The IRS issued these inflation adjustments for 2018 on October 19, 2017. Inflationary pressure remained modest during 2017. As a result, the adjustment amounts are not large.

Personal Exemption and Standard Deduction

The new personal exemption and standard deduction amounts apply to 2018 income, which must be reported in 2019. The amount of the personal exemption will increase from $4,050 in 2017 to $4,150 in 2018. The standard deduction for taxpayers filing as single or married and filing separately will rise from $6,350 to $6,500. A married couple filing a joint return will have a standard deduction of $13,000, up from $12,700 in 2017. For heads of household, the standard deduction will go up from $9,350 to $9,550.

Rate Tables for 2018

The percentage rates remain unchanged for 2018. The size of each tax bracket has changed.

  • For income up to $9,525, the rate is 10 percent.
  • For income of $9,525 to $38,700, the rate is $952.50 plus 15 percent of the amount over $9,525.
  • For income of $38,700 to $93,700, the rate is $5,328.75 plus 25 percent of the amount over $38,700.
  • For income of $93,700 to $195,45,0 the rate is $19,078.75 plus 28 percent of the amount over $93,700.
  • For income of $195,400 to $424,950, the rate is $47,568.75 plus 33 percent of the amount over $195,400.
  • For income of $424,950 to $426,700 the rate is $123,303.75 plus 35 percent of the amount over 424,950.
  • If income is over $426,700, the rate is $123,916.25 plus 39.6 percent of the amount over $426,700.

The 2018 brackets for married couples filing a joint return are as follows.

  • For income up to $19,050, the rate is 10 percent.
  • For income of $19,050 to $77,400, the rate is $1,905 plus 15 percent of the amount over $19,050.
  • For income of $77,400 to $156,150, the rate is $10,657.50 plus 25 percent of the amount over $77,400.
  • For income of $156,150 to $237,950, the rate is $30,345 plus 28 percent of the amount over $156,1500.
  • For income of $237,950 to $424,950, the rate is $453,249 plus 33 percent of the amount over $237,950.
  • For income of $424,950 to $480,050, the rate is $114,959 plus 35 percent of the amount over 424,950.
  • If income is over $480,050, the rate is $134,214 plus 39.6 percent of the amount over $480,050

Other Inflation Adjustments

The IRA issued inflation adjustments for a number of deductions and credits for 2018. For example, the maximum Earned Income Credit for a married couple with three children filing jointly goes to $6,444. The estate tax exemption will increase from $5.49 million to $5.6 million. The exemption for the alternative minimum tax will go up to $55,400 for singles and $86,200 for married couples filing a joint return.

The income limit for deducting contributions to a traditional Individual Retirement Account will increase to $199,000 for taxpayers filing a joint return. If neither spouse is covered by a retirement plan at work, there is no limit. Taxpayers will be able to contribute up to $18,500 to a 401(k) retirement plan, up $500 from 2017. The contribution limits for IRAs remain are the same.

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