Every year, the Internal Revenue Service (IRS) announces cost-of-living adjustments that affect contribution limits for retirement plans, thresholds for deductions and credits, and standard deduction and personal exemption amounts. Here are a few of the key adjustments for 2015.
Retirement plans
- Employees who participate in 401(k), 403(b), and most 457 plans can defer up to $18,000 in compensation in 2015 (up from $17,500 in 2014); employees age 50 and older can defer up to an additional $6,000 in 2015 (up from $5,500 in 2014)
- Employees participating in a SIMPLE retirement plan can defer up to $12,500 in 2015 (up from $12,000 in 2014), and employees age 50 and older will be able to defer up to an additional $3,000 in 2015 (up from $2,500 in 2014)
IRAs
The limit on annual contributions to an IRA remains unchanged at $5,500 in 2015, with individuals age 50 and older able to contribute an additional $1,000. For individuals who are covered by a workplace retirement plan, the deduction for contributions to a traditional IRA is phased out for the following modified adjusted gross income (AGI) ranges:
| 2014 | 2015 | |
|---|---|---|
| Single / head of household (HOH) | $60,000 – $70,000 | $61,000 – $71,000 |
| Married filing jointly (MFJ) | $96,000 – $116,000 | $98,000 – $118,000 |
| Married filing separately (MFS) | $0 – $10,000 | $0 – $10,000 |
Note: The 2015 phaseout range is $183,000 – $193,000 when the individual making the IRA contribution is not covered by a workplace retirement plan, but is filing jointly with a spouse who is covered.
The modified AGI phaseout ranges for individuals making contributions to a Roth IRA are:
| 2014 | 2015 | |
|---|---|---|
| Single / HOH | $114,000 – $129,000 | $116,000 – $131,000 |
| MFJ | $181,000 – $191,000 | $183,000 – $193,000 |
| MFS | $0 – $10,000 | $0 – $10,000 |
Estate and gift tax
- The annual gift tax exclusion remains $14,000
- The gift and estate tax basic exclusion amount for 2015 is $5,430,000, up from $5,340,000 in 2014
Personal exemption
The personal exemption amount has increased to $4,000 (up from $3,950 in 2014). For 2015, personal exemptions begin to phase out once AGI exceeds $258,250 (Single), $309,900 (MFJ), $284,050 (HOH), or $154,950 (MFS).
Note: These same AGI thresholds apply in determining if itemized deductions may be limited. The corresponding 2014 threshold amounts were $254,200 (single), $305,050 (MFJ), $279,650 (HOH), and $152,525 (MFS).
Standard deduction
The standard deduction amounts have been adjusted as follows:
| 2014 | 2015 | |
|---|---|---|
| Single | $6,200 | $6,300 |
| HOH | $9,100 | $9,250 |
| MFJ | $12,400 | $12,600 |
| MFS | $6,200 | $6,300 |
Note: The 2015 additional standard deduction amount (age 65 or older, or blind) is $1,550 if filing as single or HOH (unchanged from 2014) or $1,250 (up from $1,200 in 2014) for all other filing statuses. Special rules apply if you can be claimed as a dependent by another taxpayer.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2014
