Many of the provisions in the Tax Code are adjusted each year based upon the inflation for the fiscal year ended August 31. This inflation adjustment number has been issued and the new estimated numbers for 2014 are as follows (the IRS will issue final numbers a little later on, however, they should agree or the differences will be very minor):
- MFJ standard deduction increases $200 to $12,400
- Single standard deduction increases $100 to $6,200
- Phase-out of itemized deductions and personal exemptions begins at $305,050 up from $300,000 for MFJ. Single taxpayers will increase to $254,200 up from $250,000
- Top 39.6% bracket begins at $457,600 for MFJ and $406,750 for singles
- Trusts and Estates will see the top 39.6% bracket begin at $12,150
- Section 179 reverts back to $25,000 (if Congress does not change the law)
- There is no bonus depreciation (again if Congress does not change the law)
- The maximum lifetime estate and gift exemption rises from $5,250,000 to $5,340,000
- The annual gift tax exclusion will remain at $14,000 (this only changes in $1,000 increments)
- The special use valuation maximum reduction amount increases from $1,070,000 to $1,090,000 for 2014
There are many other provisions that will change, but I wanted to highlight the provisions most applicable to farmers.
We will keep you updated if the final numbers are materially different.