Financial and Tax Figures for 2016

As 2016 is nearing, you should be aware of the following financial and tax amounts:

$18,000: amount which can be contributed to most 401(k) and 457 plans for 2016.  If you are older than age 50, you can contribute an additional $6,000 above those levels for 2016.  Both of these are the same as the 2015 contribution limits.

$5,500 and $1,000: maximum amounts which can be contributed to Traditional and Roth IRA accounts for 2016, which are unchanged from 2015.

$5,450,000: the 2016 federal unified credit against the federal estate tax for one person, which is an increase of $20,000 from the 2015 amount of $5,430,000.  For a married couple, $10.9 million of assets can pass estate tax free upon death, if they had not previously used any of their unified credit during their lifetimes.

$14,000: the 2016 annual gift tax exclusion amount, which is unchanged from 2014 and 2015.  This is the amount you can gift to any one individual without affecting your federal estate tax exemption (or unified credit).  If you are married, a couple can give $28,000 to a person.

Zero: the percentage increase in Social Security benefits from 2015 to 2016.  Because the Consumer Price Index, as calculated by the government did not increase form the 3rd quarter, 2014 to 3rd quarter, 2015, there will be no cost of living increase to Social Security recipients for 2016.

$118,500: the maximum amount of wages (or self-employment earnings) subject to the 6.2% Social Security withholding tax.  This amount remains unchanged from 2015, as by law, the wage base must remain the same if there are no COLA benefit increases.

Unlimited: the amount of earnings subject to the 1.45% Medicare tax.

$15,720: the amount a worker under full retirement age can earn, if also collecting Social Security benefits, before Social Security benefits are reduced.  This limit is the same as in 2015, after which benefits are reduced for every $2 earned about this limit.

 

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