The IRS has issued its cost-of-living adjustments for 2016.
Inflation remains low, so many amounts are the same as last year,
and those that did increase did so only modestly. Nonetheless,
it's helpful to know the 2016 amounts as you evaluate which
2015 year-end tax planning strategies to implement.
Individual income taxes
Tax-bracket thresholds increase for each filing status but,
because they're based on percentages, they increase more
significantly for the higher brackets. For example, the top of the
10% bracket increases by $50 to $100, depending on filing status,
but the top of the 35% bracket increases by $1,050 to $2,100, again
depending on filing status.
The personal and dependency exemption increases by only $50, to
$4,050 for 2016. The exemption is subject to a phaseout, which
reduces exemptions by 2% for each $2,500 (or portion thereof) by
which a taxpayer's adjusted gross income (AGI) exceeds the
applicable threshold (2% of each $1,250 for
