IRS Announces Income Tax Inflation Adjustments
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- Each personal and dependency exemption will be $3,400, up $100 from 2006.
- The new standard deduction will be $10,700 for married couples filing a joint return (up $400), $5,350 for singles and married individuals filing separately (up $200) and $7,850 for heads of household (up $300).
- Tax-bracket thresholds will increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket will be $63,700, up from $61,300 in 2006.
In 2007, for the first time, inflation adjustments will increase the income limits that apply to the retirement savings contributions credit, contributions to a Roth IRA and deductible contributions to a traditional IRA where the taxpayer or the taxpayer’s spouse is covered by a retirement plan at work.
Revenue Procedure 2006-53, containing a complete list of inflation adjustments, is on the IRS Web site and will appear in Internal Revenue Bulletin 2006-48, dated Nov. 27, 2006.
