On October 31, 2013, the Internal Revenue Service announced its 2014 tax brackets including inflation adjustments to both the tax brackets and for standard deductions. In the coming year tax rates will apply as follows:

2014 Tax Brackets

2014 Tax Brackets for Singles:

10% – $0-$9,075 (up from $8,925)
15% – $9,075-$36,900 (up from $8,950-36,250)
25% – $36,900-$89,350 (up from $36,250-$87,850)
28% – $89,350-$186,350 (up from $87,850-$183,250)
33% – $186,350-$405,100 (up from $183,250-$398,350)
35% – $405,100-$406,750+ (up from $398,350-$400,000)
39.6% – $406,750+ (up from $400,000)

2014 Tax Brackets for Married Filing Jointly:

10% – $0-$18,150 (up from $0-$17,850)
15% – $18,150-$73,800 (up from $17,850-$72,500)
25% – $73,800-$148,850 (up from $72,500-$146,400)
28% – $148,850-$226,850 (up from $146,400-$223,050)
33% – $226,850-$405,100 (up from $223,050-$398,350)
35% – $405,100-$457,600 (up from $388,350-$450,000)
39.6% – $457,600+ (up from $450,000)

2014 Tax Brackets for Married Filing Separately:

10% – $0-$9,075 (up from $0-$8,925)
15% – $9,075-$36,900 (up from $8,950-$36,250)
25% – $36,900-$74,425 (up from $36,250-$73,200)
28% – $74,425-$113,425 (up from $73,200-$111,525)
33% – $113,425-$202,550 (up from $111,525-$199,175)
35% – $202,550-$228,800 (up from $199,175-$225,000)
39.6% – $228,800+ (up from $225,000+)

2014 Tax Brackets for Head of Household:

10% – $0-$12,950 (up from $0-$12,750)
15% – $12,950-$49,400 (up from $12,750-$48,600)
25% – $49,400-$127,550 (up from $48,600-$125,450)
28% – $127,550-$206,600 (up from $125,450-$203,150)
33% – $206,600-$405,100 (up from $203,150-$398,350)
35% – $405,100-$432,200 (up from $398,350-$425,000)
39.6% – $432,200+ (up from $425,000+)

The standard deduction will rise in 2014 to $6,200 (up from $6,100) for singles and married filing separate filers, $12,400 for married couples filing jointly (up from $12,200), and the head of household deduction rises to $9,100 (up from $8,950).

Personal exemptions rise as well to $3,950 up from the 2013 exemption of $3,900.

Keep in mind that while tax brackets and deductions are being adjusted for inflation, 2014 401(k) and IRA maximum contribution limits will remain unchanged .

Stephen Osborne
Accountant
sosborne@mo-cpa.com