Most Taxpayers are worried about filing their 2016 tax returns. This is a short overview of key 2017 tax changes. One piece of good news for 2016 filings is that the 2016 tax return filing date has been extended to April 18, 2017. We have chosen to leave your 2016 tax questions to your tax professionals and instead give you a heads-up on upcoming key changes for 2017. The Internal Revenue Service (IRS) is the source for all of the comments below.
Federal Lifetime Exemption Amount
The Federal Lifetime Exemption Amount has risen to $5,490,000.00 for 2017.
The Annual Gift Tax Exclusion Amount
The Annual Gift Tax Exclusion Amount remains at $14,000.00 for 2017.
IRS Mileage Rates
The IRS Mileage Rates are down across the board for 2017. For business miles, the new rate is 53.5 cents per mile. For medical or moving expenses, the rate will be down to 17 cents per mile, and for charitable or donation purposes, the rate will be 14 cents per mile. These rates are down from the 2016 rates by .5 cents per mile for business and 2 cents per mile for the other categories.
Capital Gains Tax Rates
Taxes on capital gains are a complicated subject and so the general overview below barely scratches the surface. We advise that you always consult your tax professional in any given instance. The 2017 tax rates on gains resulting from sale of capital assets depends first on whether you held the capital asset for a year or less, a “short term” capital gain, in which case ordinary tax rates apply. But, if the capital asset was held for more than a year, capital gains tax rates apply. For 2017, the long-term capital gains tax rate is 0% for those falling in the 10%-15% tax bracket, and 15% for the 25%-35% tax brackets. The tax rate of 20% applies to the 39.6% tax bracket, plus a 3.8% extra tax levied on the high income taxpayers of 3.8%, tied to the Affordable Care Act (“ACA”).
Caveat: While the above tax facts for 2017 are based on current knowledge, the new leadership on Capitol Hill and in the White House may make significant changes.