Useful Income Tax and Retirement Planning Information
Unbiased financial information provided by Financial Wisdom.
There have been several major tax law changes over the past few years with staggered effective dates. These laws have significantly changed the way you may want to consider your financial situation, especially retirement planning. Here is some information that you find helpful:
Income Tax Rate Schedules for 2017
| 2017 Single Return Rate Schedule | 2017 Married Filing Jointly Rate Schedule | ||
| Taxable income levels | Tax rate | Taxable income levels | Tax rate |
| 0 to $9,325 | 10% | 0 to $18,650 | 10% |
| $9,326 to $37,950 | 15% | $18,651 to $75,900 | 15% |
| $37,951 to $91,900 | 25% | $75,901 to $153,100 | 25% |
| $91,901 to $191,650 | 28% | $153,101 to $233,350 | 28% |
| $191,651 to $416,700 | 33% | $233,351 to $416,700 | 33% |
| $416,701 to $418,400 | 35% | $416,701 to $470,700 | 35% |
| Over $418,400 | 39.6% | Over $470,700 | 39.6% |
Income Tax Rate Schedules for 2018
| 2018 Single Return Rate Schedule | 2018 Married Filing Jointly Rate Schedule | ||
| Taxable income levels | Tax rate | Taxable income levels | Tax rate |
| 0 to $9,525 | 10% | 0 to $19,050 | 10% |
| $9,526 to $38,700 | 15% | $19,051 to $77,400 | 15% |
| $38,701 to $93,700 | 25% | $77,401 to $156,150 | 25% |
| $93,701 to $195,450 | 28% | $156,151 to $237,950 | 28% |
| $195,451 to $424,950 | 33% | $237,951 to $424,950 | 33% |
| $424,951 to $426,700 | 35% | $424,951 to $480,050 | 35% |
| Over $426,700 | 39.6% | Over $480,050 | 39.6% |
| 2017 Standard Deduction | 2018 Standard Deduction |
| Married couples filing a joint return – $12,700 | Married couples filing a joint return – $13,000 |
| Single return filers – $6,300 | Single return filers – $6,500 |
| 2017 Personal Exemption Amount | 2018 Personal Exemption Amount |
| $4,050 | $4,150 |
2017 and 2018 Taxation of Dividends and Long Term Capital Gains
For taxpayers in the 10% and 15% brackets, qualifying dividends and long term capital gains (assets held for more than a year) will be taxed at 0%. For those in 25%, 28%, 33% and 35% tax brackets, the tax rate on dividends and long term capital gains is 15%. For those in the top 39.6% bracket, the tax rate is 20%.
2017 and 2018 Medicare Surtaxes
As part of the health care reform enacted in 2010, additional Medicare surtaxes begin in 2013 for high income wage earners and high income investors. The surtaxes apply when a single taxpayer’s Modified Adjusted Gross Income (MAGI) exceeds a threshold of $200,000 or joint return filers when their MAGI exceed $250,000.
- For wage earners, an additional 0.9% Medicare surtax applies to wages (including bonuses and self-employment income) above the threshold amounts.
- For investors, an additional 3.8% Medicare surtax applies to net investment income (taxable interest, dividends, capital gains, etc.) in excess of the thresholds.
Estate Taxes
| Year | Estate Size Where Taxation Starts | Top estate tax rate |
| 2017 | $5,490,000 | 40% |
| 2018 | $5,600,000 | 40% |
| 2019 | Indexed for inflation | 40% |
Regular IRA and Roth IRA Contribution Limits
| For tax year | IRA contribution limit | Additional contribution limits for those age 50 and over |
| 2017 | $5,500 | $1,000 |
| 2018 | $5,500 | $1,000 |
401(k) Retirement Plan Contribution Limits
| For tax year | 401(k) deferral limit | Additional contribution limits for those age 50 and over |
| 2017 | $18,000 | $6,000 |
| 2018 | $18,500 | $6,000 |
Education (or Coverdell) IRAs
For 2017 and 2018, the annual contribution limit is $2000 with eligibility phase out beginning at $190,000 (for married filing jointly) and $110,000 (for individual filers) of Adjusted Gross Income (some modifications apply).
Annual Gift Tax Exclusion
- For 2017, gifts of $14,000 and under are not subject to gift tax.
- For 2018, gifts of $15,000 and under are not subject to gift tax.
2017 Payroll Taxes – Social Security and Medicare
- 2017 Employee wages subject to Social Security tax of 6.2% up to $127,200.
- 2017 Employee wages subject to Medicare tax of 1.45% on all wages and an additional 0.9% on wages above $200,000 for taxpayers filing single returns. For taxpayers filing joint returns, the additional 0.9% applies to wages above $250,000.
- 2017 Self employment income subject to Social Security tax of 12.4% up to $127,200.
- 2017 Self employment income subject to Medicare tax of 2.9% on all self-employment income and an additional 0.9% on wages above $200,000 for taxpayers filing single returns. For taxpayers filing joint returns, the additional 0.9% applies to wages above $250,000.
2018 Payroll Taxes – Social Security and Medicare
- 2018 Employee wages subject to Social Security tax of 6.2% up to $128,700.
- 2018 Employee wages subject to Medicare tax of 1.45% on all wages and an additional 0.9% on wages above $200,000 for taxpayers filing single returns. For taxpayers filing joint returns, the additional 0.9% applies to wages above $250,000.
- 2018 Self employment income subject to Social Security tax of 12.4% up to $128,700.
- 2018 Self employment income subject to Medicare tax of 2.9% on all self-employment income and an additional 0.9% on wages above $200,000 for taxpayers filing single returns. For taxpayers filing joint returns, the additional 0.9% applies to wages above $250,000.
2017 Social Security Benefits
- 2017 Average monthly benefit for all retired workers – $1,360.
- 2017 Average monthly benefit for retired couples – $2,260.
- 2017 Maximum monthly benefit for a worker at full retirement age – $2,687.
2018 Social Security Benefits
- 2018 Average monthly benefit for all retired workers – $1,404.
- 2018 Average monthly benefit for retired couples – $2,340.
- 2018 Maximum monthly benefit for a worker at full retirement age – $2,788.
