As expected, the Social Security Administration recently announced that there will be no cost-of-living adjustment (COLA) for Social Security benefits in 2016. For those under the income limits ($85,000 single/$170,000 joint) and already receiving Social Security and enrolled in Medicare Part B, premiums for Part B will also remain unchanged.
With this announcement, I thought it would be a good opportunity to review other anticipated changes in 2016:
- Personal Exemption on tax returns is expected to increase to $4,050 in 2016.
- Income tax bracket thresholds will increase slightly by an inflation factor to be determined by the IRS.
- For Example: The highest tax bracket income thresholds will increase from $464,850 to $466,950 for those married filing jointly.
- Income phase-outs for Roth IRAs and deductible IRAs if not covered by an employer plan are anticipated to increase by $1,000.
- Gift/Estate Tax Exclusion Amount is set to increase to $5,450,000.
Additionally, there are no anticipated changes in IRA contribution limits or annual gift tax exclusion amounts.
As a reminder, please check my website for helpful calculators and tools, including a Federal Income Tax calculator, which will be updated as soon as changes for 2016 become effective.