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New Tax Numbers and Mileage Rates for 2016

IRS Releases Inflation-Adjusted Amounts for 2016

Each year certain tax benefits and rates are adjusted for inflation. These adjusted amounts were recently released by the IRS for 2016.  As a general rule, very little changes were made to the figures that applied for all of 2015.

They include:
  • The amount that can be deferred into a 401k plan stays the same at $18,000, as well as the age 50 "catch-up" amount of $6,000
  • The Personal Exemption will rise from $4,000 to $4,050 for 2016
  • The Standard Deduction will remain the same for all taxpayers except for those filing as Head of Household who will see the deduction increase from $9,250 to $9,300
  • The annual exclusion for gifts will remain at $14,000 for another year
  • For those working overseas, the foreign earned income exclusion will rise from $100,800 to $101,300 for income earned during 2016
  • For estates of decedents who die during 2016, the estate tax exclusion will rise to $5,450,000 from the $5,430,000 that applied to 2015.  For married couples, the joint exclusion will rise to $10.9 million.
  • The annual contribution to IRAs will stay at $5,500, as well as the age 50 "catch-up" amount of $1,000
  • The annual deduction for Health Savings Accounts (HSA) stays the same for self-only coverage ($3,350) while family coverage increases $100 to $6,750.  The age 55 catch up will stay the same at $1,000
The IRS also announced the standard mileage rates going into effect on January 1, 2016:

  • 54 cents per mile for business miles driven, down from 57.5 cents for 2015
  • 19 cents per mile driven for medical or moving purposes, down from 23 cents for 2015
  • 14 cents per mile driven in service of charitable organizations

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