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IRS Issues Inflation Adjusted Amounts

Published on: 18:59PM Oct 21, 2015

Many of the tax rates, exemptions, etc. in the Internal Revenue Code have inflation adjustments built into them.  Inflation is calculated from October 1 to September 30 of each year to correspond to the national fiscal year.  Once that inflation increase is determined, the IRS will issue updated amounts for all items affected by inflation.

The IRS just released Revenue Ruling 2015-53 which has most of these inflation adjusted amounts and the major items applicable to farmers are:

  • The actual increase in inflation was less than 1/2 of one percent for the year.
  • Most of the marginal tax brackets had very small increases.  For example, for married couples the 10% bracket stopped at $18,450 in 2015, it now stops at $18,550.  The 39.6% maximum tax rate now kicks in at $466,950 up from $464,850.
  • For trusts, the maximum tax rate kicks in at $12,400.
  • AMT exemptions are now $53,900 for singles and $83,800 for married couples.
  • Standard deduction goes up $100 for singles to $6,300 and $200 for married couples to $12,600.
  • Exemptions are bumped $50 to $4,050.
  • The maximum amount allowed to reduce an estate under the Special Use Valuation rules is now $1,110,000.
  • The gift annual exclusion amount remains at $14,000.
  • The lifetime estate exemption amount is now $5,450,000 up only $20,000 from 2015 amounts.

As you can see, most of the adjustments were fairly minor.  Likely one of the largest adjustments was for the lifetime estate exemption amount.  In 2015, this increased from $5.34 million to $5.43 million or $90,000.  This year the adjustment was only $20,000.