The IRS recently announced its annual inflation adjustments for 2014, which will cover more than 40 tax provisions.  Notably, the following adjustments will be made for 2014:

 

• The maximum tax rate of 39.6% will affect singles whose income exceeds $406,750 ($457,600 for married taxpayers filing a joint return), up from $400,000 and $450,000, respectively.

 

•  The standard deduction rises to $6,200 for singles and married persons filing separate returns and $12,400 for married couples filing jointly, up from $6,100 and $12,200, respectively, for tax year 2013. The standard deduction for heads of household rises to $9,100, up from $8,950.

 

•  Estates of decedents who die during 2014 have a basic exclusion amount of $5,340,000, up from a total of $5,250,000 for estates of decedents who died in 2013.

 

•  The limitation for itemized deductions claimed on tax year 2014 returns of individuals begins with incomes of $254,200 or more ($305,050 for married couples filing jointly).

 

Alternatively, certain provisions will not be subject to any annual inflation adjustments, including the annual exclusion for gifts, which remains at $14,000 for 2014, and the annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA), which remains unchanged at $2,500.