December 13, 1995
Inflation Adjustments Raise 1996 Tax Benefits
WASHINGTON - Taxpayers looking ahead and planning for their
1996 taxes will find larger personal exemptions and standard
deductions, plus wider tax brackets that begin at higher income
levels. These and certain other tax items are indexed each year so
that inflation does not erode benefits or push taxpayers into higher
Personal exemptions for 1996 are raised $50 to $2,550.
The standard deduction for married couples will be $6,700, an
increase of $150 over 1995. For single taxpayers the standard
deduction will be $4,000, an increase of $100. The extra standard
deduction for age and blindness increases to $800 for married
taxpayers and $1,000 for singles, an increase of $50 each. The
minimum standard deduction for an individual who can, be claimed as
a dependent on another taxpayer's return will remain at $650.
For married couples, the 15% tax bracket will extend up to
taxable income of $40,100, an $1,100 increase. The 28% bracket will
extend from taxable income over $40,100 to $96,900, a $2,650
increase. For singles the 15% bracket will rise $650 to $24,000, and
the 28% bracket will go up $1,600 to $58,150.
Indexing will expand the earned income credit for 1996. The
income limit for the maximum credit is increased to $6,330 for a
qualifying individual with one child, $8,890 for a taxpayer with two
or more children and $4,220 for a taxpayer with no children.
The income limits designed to phase out the tax benefits of
personal exemptions and certain itemized deductions for high income
taxpayers will change for 1996. The personal exemption phaseout for
1996 starts for married couples with income above $176,950, up from
$172,050 for 1995 and above $117,950 for singles, up from $114,700
The limitation on itemized deductions will affect taxpayers with
income over $117,950, up from the 1995 level of $114,700.
(Note: Revenue Procedure 95-53 contains the 1996 inflation
adjustments and is attached. It will appear in Internal Revenue
Bulletin 1995-52, dated Dec. 26, 1995.)
1995 IRS News Releases | News Releases Main | Home