Bill Cass

Key tax figures for 2017

Bill Cass, 12/6/2016


Most tax figures will remain unchanged in 2017, according to the new tax schedule released by the Internal Revenue Service, although investors will note some changes to tax brackets and other figures to account for inflation.

Taxes are often a priority with investors, especially at year-end. The release of the 2017 tax schedule provides an opportunity to review what’s new as well as tax-planning strategies that investors may want to consider.

Some highlights from the 2017 tax schedule include:

  • The standard deduction will increase to $6,350 for individuals, and $12,700 for couples.
  • Personal exemptions and retirement contribution limits in 2017 will be unchanged from 2016.
Adjustments for inflation will affect estate taxes. The lifetime exemption amount for federal estate taxes increases to $5.49 million from $5.45 million. The annual exclusion for the gift tax, however, remains unchanged at $14,000.

The wage threshold for Social Security payroll taxes increases to $127,200 from $118,500, reflecting a 7.3% increase from 2016.

Here are some tax-planning strategies to discuss in conjunction with the 2017 tax schedule:

1. The capital gains rate is 0% for the lowest tax brackets. Gifting appreciated assets to family members in lower tax brackets can make the most of the gift. Also, some retired investors in lower tax brackets may be able to reset the cost basis of an appreciated asset tax free in mutual funds or brokerage accounts.

2. The annual gifting allowance for an individual is $14,000. The allowance, which enables individuals to gift without triggering a tax, expires annually if not utilized. A discussion of gifting may also include funding a 529 college savings plan. The gifting allowance permits individuals to fund a 529 plan by giving five years’ worth of gifts at one time.

As part of a tax-planning discussion, Putnam’s "2017 tax rates, schedules, and contribution limits" can be a useful reference to share with investors.

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