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Plan your finances for the 2016 tax year with this guide to taxpayer rates, deductions, exemptions, retirement limits, payroll tax, Social Security information and more.

Tax strategies

Key Individual and Business Tax Rates for the 2016 Tax Year

  • 12/15/2015

Download our 2016 tax guide and use it as a reference tool, or view the same information in the table below. The material is a high-level summary of some of the key individual and business federal tax rates and limits for the 2016 tax year.

Download the 2016 tax guide.

Use this guide to help you plan your tax filings. Compare the 2016 numbers to the 2015 tax rates. Contact your advisor for specifics on how these rates might apply to your situation.

Filing rates

Individual Tax Rate Filing Status
  Married Filing Jointly Single Married Filing Separately Head of Household
10% Up to $18,550 Up to $9,275 Up to $9,275 Up to $13,250
15% $18,551 – $75,300 $9,276 – $37,650 $9,276 – $37,650 $13,251 – $50,400
25% $75,301 – $151,900 $37,651 – $91,150 $37,651 – $75,950 $50,401 – $130,150
28% $151,901 – $231,450 $91,151 – $190,150 $75,951 – $115,725 $130,151 – $210,800
33% $231,451 – $413,350 $190,151 – $413,350 $115,726 – $206,675 $210,801 – $413,350
35% $413,351 – $466,950 $413,351 – $415,050 $206,676 – $233,475 $413,351 – $441,000
39.6% More than $466,950 More than $415,050 More than $233,475 More than $441,000
Itemized Deductions and Exemptions
Itemized deduction phase out start point —
single and married filing jointly
Single: $259,400
MFJ: $311,300
Standard deduction — single and married filing separately $6,300
Additional deduction age 65 or older — single $1,550
Standard deduction — married filing jointly $12,600
Additional deduction age 65 or older —
married filing jointly and married filing separately
$1,250
Standard deduction — head of household $9,300
Additional deduction age 65 or older — head of household $1,550
Personal exemption $4,050
Personal exemption phase out start point —
single and married filing jointly
Single: $259,400
MFJ: $311,300
Retirement Plans
Maximum annual benefit for defined benefit plan Up to $210,000
Defined contribution annual addition $53,000
Defined contribution compensation limit $265,000
401(k) maximum exclusion $18,000
401(k) catch-up contribution (for individuals 50 or older) $6,000
Simple contribution limit $12,500
Simple catch-up contribution (for individuals 50 or older) $3,000
IRA contribution limitation (in general) $5,500
IRA catch-up contribution (for individuals 50 or older) $1,000
Payroll Taxes
Social Security (self-employed) combined rate (OASDI + Medicare) (6.2% + 1.45%) x 2 =15.3%
Social Security (employee) rate (OASDI + Medicare) (6.2% + 1.45%) = 7.65%
OASDI contribution base $118,500
Medicare contribution base Unlimited
Additional Medicare payroll tax on earnings more than $200,000 (single) and $250,000 (married filing jointly) 0.9%
FUTA wage base $7,000
FUTA rate 6%
Social Security
Maximum earned income while receiving Social Security benefits (under age 65 years, 6 months) $15,720
Maximum earned income while receiving Social Security benefits (in the year you reach full retirement age) $41,880
Maximum earned income while receiving Social Security benefits (full retirement age) No limit
Education Phase-Outs
American Opportunity Credit (formerly Hope Credit) MFJ: $160,000 – $180,000
Other filers: $80,000 – $90,000
Lifetime Learning Credit MFJ: $111,000 – $131,000
Other filers: $55,000 – $65,000
Student loan interest deduction MFJ: $130,000 – $160,000
Single: $65,000 – $80,000
Health Savings Accounts
HSA contribution limit (single insurance coverage) $3,350
HSA contribution limit (family insurance coverage) $6,750
HSA catch-up contribution (age 55 or older) $1,000
Other
Section 179 limitation $25,000*
Annual gift tax exclusion $14,000
Estate tax exclusion amount $5,450,000
Kiddie tax threshold — children through age 18 (or age 19 – 23 for full-time students) $2,100
Travel
High cost per diem travel rate within continental United States (high/low method) $275
Low cost per diem travel rate within continental United States (high/low method) $185

*Pending extender legislation may increase this amount (perhaps to $500,000 in 2014)