IRS 2016 Income Tax Brackets and Rates

What are the 2016 income tax rates?

Each year, the IRS uses the Consumer Price Index (CPI) to calculate the past year’s inflation and adjusts income thresholds, deduction amounts, and credit values accordingly. For 2016 income tax brackets, inflation was relatively low and they were not increased much more past the 2015 income tax brackets. The IRS announced the annual inflation adjustments for a number of provisions for the year 2016, including tax rate schedules, tax tables and cost-of-living adjustments for certain tax items. This will affect many numbers used to determine tax liabilities.

Remember, you’ll use these tax brackets and tax rates when paying your 2016 taxes in early 2017. Furthermore, with the recent presidential election, President Donald Trump could change tax rates. This could go into effect for 2017 and replace these tax rates if Trump’s tax changes are passed through congress.

 

2016 Income Tax Brackets and Rates

In tax year 2016, the income limits for all brackets and all filers will be adjusted for inflation and you can see information on the specific information about 2016 tax rates on the table below. As you can see, the top marginal income tax rate of 39.6 percent will hit taxpayers with adjusted gross income of $415,050 and higher for single filers and $466,950 and higher for married filers.

 

2016 Taxable Income Brackets and Rates
Tax Rate Single Filers Married Joint Filers Head of Household Filers

10%

$0 to $9,275 $0 to $18,550 $0 to $13,250

15%

$9,275 to $37,650 $18,550 to $75,300 $13,250 to $50,400

25%

$37,650 to $91,150 $75,300 to $151,900 $50,400 to $130,150

28%

$91,150 to $190,150 $151,900 to $231,450 $130,150 to $210,800

33%

$190,150 to $413,350 $231,450 to $413,350 $210,800 to $413,350

35%

$413,350 to $415,050 $413,350 to $466,950 $413,350 to $441,000

39.6%

$415,050+ $466,950+ $441,000+
Source: Author’s Calculations.

2016 Standard Deduction and Personal Exemption

Again, the standard deduction that taxpayers are able to take on their tax returns is also indexed for inflation and changes for. The 2016 standard deduction for single and married couples filing jointly will not increase in 2016. This is same standard deduction for 2015. For taxpayers filing as head of household, it will increase by $50 from $9,250 to $9,300. This is a very small amount for the standard deduction to increase in 2016. Since there was not inflation in 2015, many tax items such as the standard deduction and personal exemption will not change in 2016.

 

2016 Personal Exemption will be $4,050.

Table 2. 2016 Standard Deduction and Personal Exemption
Filing Status Deduction Amount
Single  $6,300.00
Married Filing Jointly  $12,600.00
Head of Household  $9,300.00
Personal Exemption  $4,050.00

 

Remember, that these are estimates from the Tax Foundation. The actual 2016 income tax brackets could change depending on how the IRS interprets this information. It is best to wait until official IRS income tax brackets are released before making any tax planning decisions.

 

2016 Earned Income Credit Amount

2016’s maximum Earned Income Tax Credit for singles, heads of households, and joint filers is $506, if the filer has no children. The credit is $3,373 for one child, $5,572 for two children, and $6,268 for three or more children.

 

Other tax adjustments for 2016 Tax Year

In addition to the tax brackets and exemption and deduction amounts, there were some other inflation-related tax changes that could potentially affect you:

  • The maximum Earned Income Credit is $6,269, up from $6,242 in 2015.
  • The AGI threshold for the Lifetime Learning Credit is up $1,000 to $111,000 for joint filers.
  • The foreign income exclusion is up $500 to $101,300 for the 2016 tax year.
  • The estate-tax exclusion amount for people who die in 2016 has increased to $5.45 million, up from $5.43 million in 2015.
  • The gift tax exclusion will remain at $14,000

Information on 2015 tax rates and the 2015 standard deduction