Top tax rate starts at $457,600 in 2014 as IRS adjusts brackets
By Richard Rubin Bloomberg News
WASHINGTON – The top U.S. marginal tax rate of 39.6 percent will apply to taxable income of married couples exceeding $457,600 in 2014, up 1.7 percent from this year, the Internal Revenue Service said today.
The top rate will start at $406,750 for individuals, up from $400,000 this year. Taxpayers will start having taxes withheld from paychecks at those rates in January 2014 and will pay them when they file their tax returns in 2015.
The tax agency released brackets and inflation adjustments for dozens of tax provisions that are automatically changed annually. The inflation adjustments are the first since Congress created a seven-bracket income-tax structure in January.
The per-person standard deduction will rise to $6,200 from $6,100 and the personal exemption will be $3,950, up from $3,900.
The per-person estate-tax exclusion, which is now pegged permanently to inflation, will be $5.34 million, up from $5.25 million.
Inflation didn’t increase enough to spur increases in some thresholds. For example, the tax-advantaged contribution limit for 401(k) retirement plans will remain at $17,500.
Other tax provisions, such as the $1,000 child tax credit and the $3,000 ordinary income deduction for capital losses, aren’t tied to inflation.