For a fourth year, Bloomberg BNA has released comprehensive, projected inflation-adjusted amounts for tax brackets, penalties, thresholds, limits, and deductions in the tax code using data from the Consumer Price Index, including the medical care component, released Sept. 16. Bloomberg BNA has compiled and projected an extensive list of inflation adjustments, which are typically published in an annual revenue procedure and notice. The full report, containing over 300 inflation-adjusted amounts, is available here.
The 2016 projected inflation adjustments, generally made using a derivative of the formula in §1(f)(3) of the Code, are designed to give tax preparers and advisers the opportunity to initiate tax preparation, year-end estimation, and tax planning as soon as possible. The Internal Revenue Service (IRS) typically does not release the annual inflation adjustments until later in the fall.
Bloomberg BNA also included some items that are not adjusted for inflation in 2016, but will be adjusted in future years (§5000A – Requirement to Maintain Minimum Essential Coverage). Including these items allows practitioners to identify areas that will change in coming years and highlights a planning opportunity in these areas.
The Code imposes various penalties for failure to file returns with the IRS, failure to furnish information returns, and failure to pay tax. Taxpayers who fail to comply with return filing and tax payment requirements will face larger penalties in 2016 because of a combination of legislative increases and upward inflation adjustments.
Bloomberg BNA has projected the various penalty increases, including the §6721 penalty amounts for failure to file correct information returns. For 2016, the §6721 penalty amounts (for persons with average annual gross receipts of more than $5,000,000, not due to intentional disregard) are:
Individual Income Tax Brackets
Bloomberg BNA has projected the income tax rate tables for individuals. For 2016, the tables are:
Married Filing Jointly and Surviving Spouses
Heads of Households
Unmarried Individuals (other than Surviving Spouses and Heads of Households)
Married Filing Separately
Estate and Gift Tax Exclusions
Also included in the Bloomberg BNA projections are the estate and gift tax exclusions. For 2016, the estate tax exclusion is expected to be $5,450,000. The gift tax exclusion is expected to remain $14,000.
Itemized Deduction Limitation
Bloomberg BNA also projected the Pease limitation on itemized deductions. The Pease limitation is expected to impact taxpayers with AGI above:
Affordable Care Act Amounts
Additionally, Bloomberg BNA’s projections also take into account items that are adjusted for inflation that relate to the Affordable Care Act (Pub. L. No. 111-148), such as the §4980H employer responsibility excise tax. For 2016, the amounts used to calculate the employer responsibility excise tax are:
The full Bloomberg BNA projected inflation adjustments are available here.
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