Innovative Advisory Group's 2016 Tax Reference Guide
This is our 2016 Tax Reference Guide. We created it to make your life easier. Each year we collect this data so you don't have to. You might want to bookmark this page for future use.
If you want to check out the most recent year's 2017 Tax Reference guide, you can here.
Retirement Plan Information
IRA Contribution Limits
2016 IRA Contribution Limit | $5,500 |
Age 50+ Catch up Contribution | $1,000 |
Traditional IRA Deductibility Phase-Out Based on MAGI
Active participants in employer plans
Married - Filing Jointly | $98,000 - $118,000 |
Married - Filing Separately | $0 - $10,000 |
All others | $61,000 - $71,000 |
Nonparticipant Married to a Participant | $184,000 - $194,000 |
Neither spouse a participant | Fully deductible |
Roth IRA Phase-Out Based on MAGI
Married - Filing jointly | $184,000 - $194,000 |
Married - Filing Separately | $0 - $10,000 |
All Others | $117,000 - $132,000 |
Qualified Plans
401(k), 403 (b), 457(b) Salary Deferral | $18,000 |
Age 50+ catch up | $6,000 |
Defined Contribution Plan Limit | $53,000 |
SEP Contribution | Lesser of $53,000 or 25% of comp |
SIMPLE salary deferral | $12,500 |
Age 50+ catch up | $3,000 |
Maximum annual additions in a defined contribution plan | $53,000 |
Maximum annual benefit in defined benefit plan | $210,000 |
Maximum compensation considered | $265,000 |
Highly compensated employee | $120,000 |
Key Employee / Officer | $170,000 |
Special Catch-up rules applies to certain 403(b) contributors with 15 or more years of service and governmental 457(b) participants in the last 3 years before retirement.
Income Taxes
Federal Income Taxes
Single Filing
Taxable Income | Tax rate |
$0 - $9,275 | 10.00% |
$9,275 - $37,650 | 15.00% |
$37,650 - $91,150 | 25.00% |
$91,150 - $190,150 | 28.00% |
$190,150 - $413,350 | 33.00% |
$413,350 - $415,050 | 35.00% |
Over $415,050 | 39.60% |
Married Filing jointly
Taxable Income | Tax Rate |
$0 - $18,550 | 10.00% |
$18,550 - $75,300 | 15.00% |
$75,300 - $151,900 | 25.00% |
$151,900 - $231,450 | 28.00% |
$231,450 - $413,350 | 33.00% |
$413,350 - $466,950 | 35.00% |
Over $466,950 | 39.60% |
Married Filing Separately
Taxable Income | Tax Rate |
$0 - $9,275 | 10.00% |
$9,275 - $37,650 | 15.00% |
$37,650 - $75,950 | 25.00% |
$75,950 - $115,725 | 28.00% |
$115,725 - $206,675 | 33.00% |
$206,675 - $233,475 | 35.00% |
Over $233,475 | 39.60% |
Head of Household
Taxable Income | Tax Rate |
$0 - $13,250 | 10.00% |
$13,250 - $50,400 | 15.00% |
$50,400 - $130,150 | 25.00% |
$130,150 - $210,800 | 28.00% |
$210,800 - $413,350 | 33.00% |
$413,350 - $441,000 | 35.00% |
Over $441,000 | 39.60% |
Trusts and Estates
Taxable Income | Tax Rate |
$0 - $2,550 | 15.00% |
$2,550 - $5,950 | 25.00% |
$5,950 - $9,050 | 28.00% |
$9,050 - $12,400 | 33.00% |
Over $12,400 | 39.60% |
Capital Gains & Dividends
Income Tax Bracket | Tax Rate |
0 - 15% | 0% |
20 - 35% | 15% |
39.6% | 20% |
Federal Tax Deductions
Standard Deductions
Single | $6,300 |
Married filing jointly | $12,600 |
Married filing separately | $6,300 |
Head of household | $9,300 |
Personal exemption | $4,050 |
Kiddie tax | $1,050 |
Student Loan Interest Deduction
The maximum deduction for student loan interest is $2,500. The deduction is phased out according to this table.
Single return phase-out | $65,000 - 80,000 |
Joint return phase-out | $130,000 - 160,000 |
Federal Estate Tax and Gift Tax
Annual gift tax exclusion | $14,000 |
Unified credit exemption | $5,450,000 |
Gift to non-citizen spouse | $148,000 |
Highest estate tax bracket | 40% |
State Estate Tax
States with separate estate tax | CT, DC, DE, HI, IL, MA, MD, ME, MN, NJ, NY, OR, RI, VT, WA |
States with inheritance tax | IA, IN, KY, MD, NE, NJ, PA |
Community property states | AK*, AZ, CA, ID, LA, NM, NV, TX, WA, WI |
* Opt-in community property state
Education Incentives
Phase-Out for American Opportunity Credit / Hope Scholarship Credit
Married filing jointly | $160,000 - $180,000 |
Others | $80,000 - $90,000 |
Phase-Out for Lifetime Learning Credits
Married filing jointly | $55,000 - $65,000 |
Others | $111,000 - $131,000 |
Phase-Out for Exclusion of US Savings Bond Income
Married filing jointly | $116,300 - $146,300 |
Others | $77,550 - $92,550 |
Phase-Out for Coverdell Education Savings Accounts
Married filing jointly | $190,000 - $220,000 |
Others | $95,000 - $110,000 |
Contribution Limit | $2,000 |
Annual Contribution Limit (per child before gift tax) | $14,000 |
Accelerated contribution (5 years contributed in 1 year) | $70,000 |
Couple contribution limit | $140,000 |
Social Security
Taxable Wage Base
Social Security (OASDI) | $118,500 |
Medicare (HI only) | No Limit |
Retirement Earning Test
Under Full Retirement Age* | $118,500 |
At full retirement age** | No Limit |
* One dollar of benefits will be withheld for every $2 in earnings above the limit.
** Applies only to earnings for months prior to attaining full retirement age. One dollar in benefits will be withheld for every $3 in earnings above the limit.
Taxability of Benefits
Individual | Married Filing Jointly | |
Not Taxable | Less than $25,000 | Less than $32,000 |
Up to 50% taxable | $25,000 - $34,000 | $32,000 - $44,000 |
Up to 85% taxable | Greater than $34,000 | Greater than $44,000 |
* Provisional Income = Adjusted Gross Income + Non-taxable Income + 1/2 Social Security Benefits
Age to Receive Full Benefits
Birth Year | Full Retirement | % Reduced at Age 62 |
1943 - 1954 | 66 | 25% |
1955 | 66 and 2 months | 25.83% |
1956 | 66 and 4 months | 26.67% |
1957 | 66 and 6 months | 27.5% |
1958 | 66 and 8 months | 28.33% |
1959 | 66 and 10 months | 29.17% |
1960 to present | 67 | 30% |
Delayed Retirement Credits
Birth Year | Annual Rate of Increase |
1943 or later | 8.00% |
Accrues when you reach full retirement age until you start receiving benefits or reach age 70.
Miscellaneous Tax
Health Savings Accounts
Contribution Limits
Single | $3,350 |
Family | $6,750 |
Catch up at age 55+ | $1,000 |
High Deductible Health Plans
Minimum deductible single | $1,300 |
Minimum deductible family | $2,600 |
Maximum out of pocket single | $6,550 |
Maximum out of pocket family | $13,100 |
Unearned Income Medicare Contribution Tax
Filing Status | MAGI | Rate |
Single File | $200,000+ | 3.8% |
Head of household | $200,000+ | 3.8% |
Married filing jointly | $250,000+ | 3.8% |
Married filing separately | $125,000 | 3.8% |
Trusts and Estates | $12,500 | 3.8% |
FICA Tax Rates
Self Employed | Employee | |
OASDI (Social Security) | 12.4% | 6.2% |
HI (Medicare) | 2.9% | 1.45% |
Additional Medicare Tax* | 0.9% | 0.9% |
* Beginning in 2013, the additional medicare tax applied to wages and self-employment income above the following thresholds:
Filing Status | Wages or Self-Employment Income above the MAGI threshold |
Married Jointly | Above $250,000 |
Married Separately | Above $125,000 |
Other | Above $200,000 |
About Innovative Advisory Group: Innovative Advisory Group, LLC (IAG), an independent Registered Investment Advisory Firm, is bringing innovation to the wealth management industry by combining both traditional and alternative investments. IAG is unique in that they have an extensive understanding of the regulatory and financial considerations involved with alternative investments held in self directed IRAs and other retirement accounts. IAG advises clients on traditional investments, such as stocks, bonds, and mutual funds, as well as advising clients on alternative investments. IAG has a value-oriented approach to investing, which integrates specialized investment experience with extensive resources.
For more information you can visit: Innovative Advisory Group
About the author: Kirk Chisholm is a Wealth Manager and Principal at Innovative Advisory Group. His roles at IAG are co-chair of the Investment Committee and Head of the Traditional Investment Risk Management Group. His background and areas of focus are portfolio management and investment analysis in both the traditional and alternative investment markets. He received a BA degree in Economics from Trinity College in Hartford, CT.
Disclaimer: This article is intended solely for informational purposes only, and in no manner intended to solicit any product or service. The opinions in this article are exculsively of the author(s) and may or may not reflect all those who are employed, either directly or indirectly or affiliated with Innovative Advisory Group, LLC.