2016 tax rules — a quick review

Income tax rates — Range from 10% to 35% unless taxable income exceeds $415,050 for singles or $466,950 for married couples. Rate on income above those amounts is 39.6%.

Estate & gift tax — Annual tax-free gifts allowed with $14,000 per gift limit. Estate tax exemption of $5,450,000 for 2016 with 40% top tax rate.

Breaks now permanent — 1) optional deduction for state and local sales tax in lieu of state and local income tax; 2) the $250 deduction for classroom supplies paid by teachers; and 3) IRA-to-charity transfer of up to $100,000 by taxpayers 701/2 or older.

Itemized deductions — Limited for single taxpayers with adjusted gross income (AGI) above $259,400 and married couples with AGI above $311,300.

Alternative minimum tax — Exemption amount for 2016: $53,900 for singles; $83,800 for married filing jointly.

Business expensing — Up to $500,000 for new and used equipment and 50% bonus depreciation for new assets.

Personal exemptions — Phased out for singles with AGI above $259,400 and marrieds with AGI above $311,300.

Capital gains & dividends — Long-term gains taxed at 15% for most taxpayers. Zero percent for those in 10% and 15% ordinary income brackets; 20% for those in 39.6% ordinary income bracket.

Medicare tax on earned income — Medicare surtax of 0.9% imposed on wages and self-employment income exceeding $200,000 for singles and $250,000 for married couples.

Net investment income tax — A 3.8% tax imposed on unearned income for singles with modified AGI exceeding $200,000 and for couples with modified AGI exceeding $250,000.

© MC 2016