We’re well into January now, and many people are already thinking ahead to filing this year’s taxes. It’s important to note that many tax-related specifications in 2017 are the same as they were last year.
Below is a short overview of what you can expect for your taxes and investments in 2017.
Education savings: Individuals can each contribute up to $14,000 a year to a 529 college savings plan for one individual without that contribution counting toward gift tax. For large contributions, individuals can contribute up to $70,000 to a 529 college savings plan on behalf of one individual in a given year – that contribution will not count toward the gift tax if that person does not make future contributions on behalf of the same individual for the next five years. Contributors can also earn state tax breaks on money they put into in a 529.
Dividend and capital gains rates: Same in 2017 as they were in 2016 (adjusted for inflation).
IRA contribution limits: Same for 2017 as they were in 2016.
401(k) contribution limits: Same for 2017.
Estate and gift tax: The annual gift tax exclusion amount is the same in 2017. The individual estate tax exclusion amount rose slightly to $5.45 million this year.
Structured attorney fees: There are no limits on structuring attorney fees up to $1 billion.
Medicare surtax: The income thresholds for the 3.8 percent Medicare surtax is the same in 2017 as it was in 2016.
There may be additional changes on the horizon. As Christine Benz notes in her article for Morningstar,
“President-elect Donald Trump laid out a number of tax-related goals during the campaign, including repealing the Medicare surtax, alternative minimum tax, and estate and gift taxes, while reducing the maximum ordinary income tax rate to 33%. The last proposal, part of a larger plan to simplify income-tax brackets from the current seven to just three, created a flurry of excitement following the election. Not only would it represent a significant tax reduction for high-income earners, but a substantially lower top tax rate would reduce the benefits of strategies such as charitable giving.”
In terms of those monumental changes, nothing is set in stone yet. It’s best to just wait and watch before making a major move.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).