The IRS announced some changes that may effect you this year, including federal income tax brackets and rates that could effect your 2015 tax return. Other changes include 2015 retirement plan contributions limits. You may now contribute up to $18,000 to your 401(k) and many of the 457 plans has been increased from the previous $17,500. Also effected is the federal government’s Thrift Savings Plan. For those who started saving in a 401(k) or 457 plan late in life, the catch up contribution limit has been increased from $5,500 to $6,000.
For those singles and heads of households who are making contributions to a traditional IRA, your deductions will be phased out if you are already covered by a workplace retirement plan and if your modified adjusted gross incomes are between $61,000 and $71,000. This cap has increased by $1000 this year as in 2014 it had been between $60,000 and $70,000 in 2014. For married couples if one spouse is making an IRA contribution but is also covered by a workplace retirement plan, that spouses the new income phase out range is set at $98,000 to $118,000, up $2000 from the $96,000 to $116,000 in 2014. If one spouse contributes to an IRA but is not covered by a workplace retirement plan, yet is married to someone who is covered then the deduction is phased out if the couples combined income is between $183,000 and $193,000, also up $2000 since 2014.
Taxpayers who are making contributions to a Roth IRA face an AGI phase-out range of $183,000 to $193,000 for married couples who are filing jointly and singles or heads of households in the same situation are looking at phase out ranges of $116,000 to $131,000. Sadly for a married individual filing a separate return who happens to be covered by a workplace retirement plan the phase out range remains the same at $0 to $10,000.
For those who rely on saver’s credit, the AGI limit for low and moderate income workers is now set at $61,000 for married couples who are filling jointly and set at $45,750 for those who are heads of household. For married people who are filing separately as well as singles the AGI phase out limit for saver’s credit is set at $30,500 up only $500 from $30,000 in 2014.
The tax brackets are as follows:
Married and filling jointly:
Up to $18,449 = 10 % of taxable income
$18,450 to $74,900 = $1845 plus 15% of the excess over $18,450
$74,900 to $151,200 = $10,312.50 plus 25% of the excess over $74,000
$151,200 to $239,450 = $29,387.50 plus 28% of the excess over $151,200
$239,450 to $411,500 = $51,577.50 plus 33% of the excess over $230,450
The tax bracket for singles is as follows:
Up to $9224 = 10 % of taxable income
$9,225 to $37,450 = $922.50 plus 15% of the excess over $9,225
$37,450 to $90,750 = $5,165.25 plus 25% of the excess over $37,450
$90,750 to $189,750 = $18,481.25 plus 28% of the excess over $90,750
$189,750 to $411,500 = $46,075.25 plus 33% of the excess over $189,750
Now here is the weird tax jump:
$411,500 to $413,200 = 119,401.25 plus 35% of the excess over $411,500 which would cost you over $73,326 in extra taxes from the last bracket all over an increase of up to $1700 in income!
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