2015 California Tax Rates and Exemptions

Rate of inflation

The rate of inflation in California, for the period from July 1, 2014, through June 30, 2015, was 1.3%. The 2015 personal income tax brackets are indexed by this amount.

Corporate tax rates

Entity type Tax rate
Corporations other than banks and financials 8.84%
Banks and financials 10.84%
Alternative Minimum Tax (AMT) rate 6.65%
S corporation rate 1.5%
S corporation bank and financial rate 3.5%

Individual tax rates

  • The maximum rate for individuals is 12.3%
  • The AMT rate for individuals is 7%
  • The Mental Health Services Tax Rate is 1% for taxable income in excess of $1,000,000.

Exemption credits

Filing Status/Qualification Exemption amount
Married/Registered Domestic Partner (RDP) filing jointly or qualifying widow(er) $218
Single, married/RDP filing separately, or head of household $109
Dependent $337
Blind $109
Age 65 or older $109

Phaseout of exemption credits

Higher-income taxpayers’ exemption credits are reduced as follows:

Filing status Reduce each credit by: For each: Federal AGI exceeds:
Single $6 $2,500 $178,706
Married/RDP filing separately $6 $1,250 $178,706
Head of household $6 $2,500 $268,063
Married/RDP filing jointly $12 $2,500 $357,417
Qualifying widow(er) $12 $2,500 $357,417

When applying the phaseout amount, apply the $6/$12 amount to each exemption credit, but do not reduce the credit below zero. If a personal exemption credit is less than the phaseout amount, do not apply the excess against a dependent exemption credit.

Standard deductions

The standard deduction amounts for:

Filing status Deduction amount
Single or married/RDP filing separately $4,044
Married/RDP filing jointly, head of household, or qualifying widow(er) $8,088
The minimum standard deduction for dependents $1,050

Reduction in itemized deductions

Itemized deductions must be reduced by the lesser of 6% of the excess of the taxpayer’s federal AGI over the threshold amount or 80% of the amount of itemized deductions otherwise allowed for the taxable year.

Filing status AGI threshold
Single or married/RDP filing separately $178,706
Head of household $268,063
Married/RDP filing jointly or qualifying widow(er) $357,417

Nonrefundable Renter’s credit

This nonrefundable, non-carryover credit for renters is available for:

  • Single or married/RDP filing separately with a California AGI of $38,259 or less.
    • The credit is $60.
  • Married/RDP filing jointly, head of household, or qualifying widow(er) with a California AGI of $76,518 or less.
    • The credit is $120.

Miscellaneous credits

  • Qualified senior head of household credit
    • 2% of California taxable income
    • Maximum California AGI of $69,902
    • Maximum credit of $1,317
  • Joint custody head of household credit/dependent parent credit
    • 30% of net tax
    • Maximum credit of $431

AMT exemption

Filing status Amount
Married/RDP filing jointly or qualifying widow(er) $87,627
Single or head of household $65,721
Married/RDP filing separately, estates, or trusts $43,812

AMT exemption phaseout

Filing status Amount
Married/RDP filing jointly or qualifying widow(er) $328,601
Single or head of household $246,451
Married/RDP filing separately, estates, or trusts $164,299

FTB cost recovery fees

Fee type Fee
Bank and corporation filing enforcement fee $92
Bank and corporation collection fee $334
Personal income tax filing enforcement fee $79
Personal income tax collection fee $226

The personal income tax fees apply to individuals and partnerships, as well as limited liability companies that are classified as partnerships. The bank and corporation fees apply to banks and corporations, as well as limited liability companies that are classified as corporations. Interest does not accrue on these cost recovery fees.

2015 California Tax Rate Schedules

Schedule X — Single or married/RDP filing separately

If the taxable income is
Over But not over Tax is Of amount over
$0 $7,850 $0.00 plus 1.00% $0
$7,850 $18,610 $78.50 plus 2.00% $7,850
$18,610 $29,372 $293.70 plus 4.00% $18,610
$29,372 $40,773 $724.18 plus 6.00% $29,372
$40,773 $51,530 $1,408.24 plus 8.00% $40,773
$51,530 $263,222 $2,268.80 plus 9.30% $51,530
$263,222 $315,866 $21,956.16 plus 10.30% $263,222
$315,866 $526,443 $27,378.49 plus 11.30% $315,866
$526,443 AND OVER $51,173.69 plus 12.30% $526,443

Schedule Y — Married/RDP filing jointly, or qualifying widow(er) with dependent child

If the taxable income is
Over But not over Tax is Of amount over
$0 $15,700 $0.00 plus 1.00% $0
$15,700 $37,220 $157.00 plus 2.00% $15,700
$37,220 $58,744 $587.40 plus 4.00% $37,220
$58,744 $81,546 $1,448.36 plus 6.00% $58,744
$81,546 $103,060 $2,816.48 plus 8.00% $81,546
$103,060 $526,444 $4,537.60 plus 9.30% $103,060
$526,444 $631,732 $43,912.31 plus 10.30% $526,444
$631,732 $1,052,886 $54,756.97 plus 11.30% $631,732
$1,052,886 AND OVER $102,347.37 plus 12.30% $1,052,886

Schedule Z — Head of household

If the taxable income is
Over But not over Tax is Of amount over
$0 $15,710 $0.00 plus 1.00% $0
$15,710 $37,221 $157.10 plus 2.00% $15,710
$37,221 $47,982 $587.32 plus 4.00% $37,221
$47,982 $59,383 $1,017.76 plus 6.00% $47,982
$59,383 $70,142 $1,701.82 plus 8.00% $59,383
$70,142 $357,981 $2,562.54 plus 9.30% $70,142
$357,981 $429,578 $29,331.57 plus 10.30% $357,981
$429,578 $715,962 $36,706.06 plus 11.30% $429,578
$715,962 AND OVER $69,067.45 plus 12.30% $715,962

Individual Filing Requirements

If your gross income or adjusted gross income is more than the amount shown in the chart below for your filing status, age, and number of dependents, then you have a filing requirement.

Filing Status Age as of December 31, 2015* California Gross Income California Adjusted Gross Income
Dependents Dependents
0 1 2 or more 0 1 2 or more
Single or head of household Under 65 $16,256 $27,489 $35,914 $13,005 $24,238 $32,663
65 or older $21,706 $30,131 $36,871 $18,455 $26,880 $33,620
Married/RDP filing jointly or separately Under 65 (both spouses/RDPs) $32,514 $43,747 $52,172 $26,012 $37,245 $45,670
65 or older (one spouse) $37,964 $46,389 $53,129 $31,462 $39,887 $46,627
65 or older
(both spouses/RDPs)
$43,414 $51,839 $58,579 $36,912 $45,337 $52,077
Qualifying widow(er) Under 65 N/A $27,489 $35,914 N/A $24,238 $32,663
65 or older N/A $30,131 $36,871 N/A $26,880 $33,620
Dependent of another person (Any filing status) Under 65 More than your standard deduction
65 or older More than your standard deduction

* If you turn 65 on January 1, 2016, you are considered to be age 65 at the end of 2015.

Source

2015 California 540 Tax Forms – Personal Income Tax

540 Form 2015 California Resident Income Tax Return (Fill-in & Save)
540 Instructions 2015 Instructions for 540 Form, California Resident Income Tax Returns
540 Tax Table 2015 Tax Table for 540 Tax Return
540-2EZ Instructions 2015 Instructions for 540-2EZ Form, California Resident Income Tax Return
540-2EZ Tax Table 2015 Tax Table for 540-2EZ Tax Return
540-2EZ Form 2015 California Resident Income Tax Return (Fill-in with math features & save)
540-ES Form 2015 Estimated Tax for Individuals (Fill-in)
540-ES Instructions 2015 Instructions for 540-ES Form, Estimated Tax for Individuals
540-NR Form (Long) 2015 California Nonresident or Part-Year Resident Income Tax Return (Long) (Fill-in & Save)
540-NR Instructions (Long) 2015 Instructions for 540-NR Long Form, California Nonresident or Part-Year Resident Income Tax Return (Long)
540-NR Form (Short) 2015 California Nonresident or Part-Year Resident Income Tax Return (Short) (Fill-in & Save)
540-NR Instructions (Short) 2015 Instructions for 540-NR Short Form, California Nonresident or Part-Year Resident Income Tax Return (Short)
540-NR Tax Table 2015 Tax Table for 540-NR Tax Return
540-X Form 2015 Amended Individual Income Tax Return (Fill-in)
540-X Instructions 2015 Instructions for 540-X Form, Amended Individual Income Tax Return

2016 IRS Standard Mileage Rates

Beginning on Jan. 1, 2016, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 54 cents per mile for business miles driven, down from 57.5 cents for 2015
  • 19 cents per mile driven for medical or moving purposes, down from 23 cents for 2015
  • 14 cents per mile driven in service of charitable organizations

The business mileage rate decreased 3.5 cents per mile and the medical, and moving expense rates decrease 4 cents per mile from the 2015 rates. The charitable rate is based on statute.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

Source

Report Certain Foreign Bank and Financial Accounts by June 30, 2015

The Internal Revenue Service today reminded everyone who has one or more bank or financial accounts located outside the United States, or signature authority over such accounts, that they may need to file an FBAR by next Tuesday, June 30.

FBAR refers to Report 114, Report of Foreign Bank and Financial Accounts, which must be filed with the Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury Department. It is not a tax form and cannot be filed with the IRS. The form must be filed electronically and is only available online through the BSA E-Filing System website.

In general, the filing requirement applies to anyone who had an interest in, or signature or other authority over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2014. Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them.

Read more

California Income Tax 2014

2014 California 540  Tax Forms – Personal Income Tax

On this page you will find:

-  Forms 540  (California Resident Income Tax Return) and instructions how to fill this forms.

- California Nonresident or Part-Year Resident Income Tax Return

- Amended Individual Income Tax Return

-Estimated Tax for Individuals

California State Individual Income Tax Forms 2014

2014 California Tax Calulator

2014 Tax Rates and Exemptions

 

Individual tax rates

  • The maximum rate for individuals is 12.3%
  • The AMT rate for individuals is 7%
  • The Mental Health Services Tax Rate is 1% for taxable income in excess of $1,000,000.

California State and Federal Income Tax Forms

California State Income Tax Forms

2014 California 540 Tax Forms – Personal Income Tax

540 Form – 2014 California Residents
540-2EZ Form– 2014 California Resident
540-NR Form (Long) – CA part-year or nonresident
540-ES Form– 2014 estimated tax

More California State  tax forms and publications

Federal Forms

Form W-4 – 2015 Employee’s Withholding Allowance Certificate
Form W-9 – Request for Taxpayer Identification Number and Certification
Form 1040-ES –  Estimated Tax for Individuals
Form 1040 – U.S. Individual Income Tax Return
Form 941 – 2014 Employer’s QUARTERLY Federal Tax Return

More Federal forms and publications

Check for latest forms

2014 California Tax Rates and Exemptions

The rate of inflation in California, for the period from July 1, 2013, through June 30, 2014, was 2.2%. The 2014 personal income tax brackets are indexed by this amount.

Corporate tax rates

Entity type Tax rate
Corporations other than banks and financials 8.84%
Banks and financials 10.84%
Alternative Minimum Tax (AMT) rate 6.65%
S corporation rate 1.5%
S corporation bank and financial rate 3.5%

Individual tax rates

  • The maximum rate for individuals is 12.3%
  • The AMT rate for individuals is 7%
  • The Mental Health Services Tax Rate is 1% for taxable income in excess of $1,000,000.

Exemption credits

Filing Status/Qualification Exemption amount
Married/Registered Domestic Partner (RDP) filing jointly or qualifying widow(er) $216
Single, married/RDP filing separately, or head of household $108
Dependent $333
Blind $108
Age 65 or older $108

Phaseout of exemption credits

Higher-income taxpayers’ exemption credits are reduced as follows:

Filing status Reduce each credit by: For each: Federal AGI exceeds:
Single $6 $2,500 $176,413
Married/RDP filing separately $6 $1,250 $176,413
Head of household $6 $2,500 $264,623
Married/RDP filing jointly $12 $2,500 $352,830
Qualifying widow(er) $12 $2,500 $352,830

When applying the phaseout amount, apply the $6/$12 amount to each exemption credit, but do not reduce the credit below zero. If a personal exemption credit is less than the phaseout amount, do not apply the excess against a dependent exemption credit.

Standard deductions

The standard deduction amounts for:

Filing status Deduction amount
Single or married/RDP filing separately $3,992
Married/RDP filing jointly, head of household, or qualifying widow(er) $7,984
The minimum standard deduction for dependents $1,000

Reduction in itemized deductions

Itemized deductions must be reduced by the lesser of 6% of the excess of the taxpayer’s federal AGI over the threshold amount or 80% of the amount of itemized deductions otherwise allowed for the taxable year.

Filing status AGI threshold
Single or married/RDP filing separately $176,413
Head of household $264,623
Married/RDP filing jointly or qualifying widow(er) $352,830

Nonrefundable Renter’s credit

This nonrefundable, non-carryover credit for renters is available for:

  • Single or married/RDP filing separately with a California AGI of $37,768 or less.
    • The credit is $60.
  • Married/RDP filing jointly, head of household, or qualifying widow(er) with a California AGI of $75,536 or less.
    • The credit is $120.

Miscellaneous credits

  • Qualified senior head of household credit
    • 2% of California taxable income
    • Maximum California AGI of $69,005
    • Maximum credit of $1,300
  • Joint custody head of household credit/dependent parent credit
    • 30% of net tax
    • Maximum credit of $425

AMT exemption

Filing status Amount
Married/RDP filing jointly or qualifying widow(er) $86,502
Single or head of household $64,878
Married/RDP filing separately, estates, or trusts $43,250

AMT exemption phaseout

Filing status Amount
Married/RDP filing jointly or qualifying widow(er) $324,384
Single or head of household $243,288
Married/RDP filing separately, estates, or trusts $162,191

FTB cost recovery fees

Fee type Fee
Bank and corporation filing enforcement fee $96
Bank and corporation collection fee $310
Personal income tax filing enforcement fee $76
Personal income tax collection fee $194

The personal income tax fees apply to individuals and partnerships, as well as limited liability companies that are classified as partnerships. The bank and corporation fees apply to banks and corporations, as well as limited liability companies that are classified as corporations. Interest does not accrue on these cost recovery fees.

2014 California Tax Rate Schedules

Schedule X — Single or married/RDP filing separately

If the taxable income is
Over But not over Tax is Of amount over
$0 $7,749 $0.00 plus 1.00% $0
$7,749 $18,371 $77.49 plus 2.00% $7,749
$18,371 $28,995 $289.93 plus 4.00% $18,371
$28,995 $40,250 $714.89 plus 6.00% $28,995
$40,250 $50,869 $1,390.19 plus 8.00% $40,250
$50,869 $259,844 $2,239.71 plus 9.30% $50,869
$259,844 $311,812 $21,674.39 plus 10.30% $259,844
$311,812 $519,687 $27,027.09 plus 11.30% $311,812
$519,687 AND OVER $50,516.97 plus 12.30% $519,687

Schedule Y — Married/RDP filing jointly, or qualifying widow(er) with dependent child

If the taxable income is
Over But not over Tax is Of amount over
$0 $15,498 $0.00 plus 1.00% $0
$15,498 $36,742 $154.98 plus 2.00% $15,498
$36,742 $57,990 $579.86 plus 4.00% $36,742
$57,990 $80,500 $1,429.78 plus 6.00% $57,990
$80,500 $101,738 $2,780.38 plus 8.00% $80,500
$101,738 $519,688 $4,479.42 plus 9.30% $101,738
$519,688 $623,624 $43,348.77 plus 10.30% $519,688
$623,624 $1,039,374 $54,054.18 plus 11.30% $623,624
$1,039,374 AND OVER $101,033.93 plus 12.30% $1,039,374

Schedule Z — Head of household

If the taxable income is
Over But not over Tax is Of amount over
$0 $15,508 $0.00 plus 1.00% $0
$15,508 $36,743 $155.08 plus 2.00% $15,508
$36,743 $47,366 $579.78 plus 4.00% $36,743
$47,366 $58,621 $1,004.70 plus 6.00% $47,366
$58,621 $69,242 $1,680.00 plus 8.00% $58,621
$69,242 $353,387 $2,529.68 plus 9.30% $69,242
$353,387 $424,065 $28,955.17 plus 10.30% $353,387
$424,065 $706,774 $36,235.00 plus 11.30% $424,065
$706,774 AND OVER $68,181.12 plus 12.30% $706,774

Individual Filing Requirements

If your gross income or adjusted gross income is more than the amount shown in the chart below for your filing status, age, and number of dependents, then you have a filing requirement.

Filing Status Age as of December 31, 2014* California Gross Income California Adjusted Gross Income
Dependents Dependents
0 1 2 or more 0 1 2 or more
Single or head of household Under 65 $16,047 $27,147 $35,472 $12,838 $23,938 $32,263
65 or older $21,447 $29,772 $36,432 $18,238 $26,563 $33,223
Married/RDP filing jointly or separately Under 65 (both spouses/RDPs) $32,097 $43,197 $51,522 $25,678 $36,778 $45,103
65 or older (one spouse) $37,497 $45,822 $52,482 $31,078 $39,403 $46,063
65 or older
(both spouses/RDPs)
$42,897 $51,222 $57,882 $36,478 $44,803 $51,463
Qualifying widow(er) Under 65 N/A $27,147 $35,472 N/A $23,938 $32,263
65 or older N/A $29,772 $36,432 N/A $26,563 $33,223
Dependent of another person (Any filing status) Under 65 More than your standard deduction
65 or older More than your standard deduction

* If you turn 65 on January 1, 2015, you are considered to be age 65 at the end of 2014.

Source

Maximum Standard Automobile Cost (2015)

For purposes of computing the allowance under a FAVR plan, the standard automobile cost may not exceed $28,200 for automobiles (excluding trucks and vans) or $30,800 for trucks and vans.

Source

Section 6.02(6) of Rev.Proc. 2010-51.

.02 Computing a FAVR allowance.

(1) FAVR allowance. A FAVR allowance includes periodic fixed payments and periodic variable payments. A payor may maintain more than one FAVR allowance. A FAVR allowance that uses the same payor, standard automobile (or an automobile of the same make and model that is comparably equipped), retention period, and business use percentage is considered one FAVR allowance, even though other features of the allowance may vary. A FAVR allowance also includes any optional high mileage payments. However, optional high mileage payments are included in an employee’s gross income, are reported as wages or other compensation on the employee’s Form W-2, and are subject to withholding and payment of employment taxes when paid. See section 7.05 of this revenue procedure. An optional high mileage payment covers the additional depreciation for a standard automobile attributable to business miles an employee drives and substantiates for a calendar year in excess of the annual business mileage for that year. If a FAVR allowance covers an employee for less than the entire calendar year, the annual business mileage may be prorated on a monthly basis for purposes of the preceding sentence.

(2) Periodic fixed payment. A periodic fixed payment covers the projected fixed costs (including depreciation or lease payments, insurance, registration and license fees, and personal property taxes) of driving the standard automobile in performing services as an employee of the employer in a base locality, and must be paid at least quarterly. A payor may compute a periodic fixed payment by (a) dividing the total projected fixed costs of the standard automobile for all years of the retention period, determined at the beginning of the retention period, by the number of periodic fixed payments in the retention period, and (b) multiplying the resulting amount by the business use percentage.

(3) Periodic variable payment. A periodic variable payment covers the projected variable costs (including gasoline and all taxes thereon, oil, tires, and routine maintenance and repairs) of driving a standard automobile in performing services as an employee in a base locality, and must be paid at least quarterly. A payor may compute a periodic variable payment rate for a computation period by dividing the total projected variable costs for the standard automobile for the computation period, determined at the beginning of the computation period, by the computation period mileage. A computation period may be any period of a year or less. Computation period mileage is the total mileage (business and personal) a payor reasonably projects a standard automobile will be driven during a computation period and equals the retention mileage divided by the number of computation periods in the retention period. For each business mile an employee substantiates for the computation period, a payor must make a periodic variable payment at a rate that does not exceed the rate for that computation period.

(4) Base locality. A base locality is the particular geographic locality or region of the United States where an employee generally pays or incurs the costs of driving an automobile in performing services as an employee. Thus, for purposes of determining the amount of fixed costs, the base locality is generally the geographic locality or region where the employee resides. For purposes of determining the amount of variable costs, the base locality is generally the geographic locality or region where the employee drives the automobile in performing services as an employee.

(5) Standard automobile. A standard automobile is the automobile a payor selects on which a specific FAVR allowance is based.

(6) Standard automobile cost. The standard automobile cost for a calendar year may not exceed 95 percent of the sum of (a) the retail dealer invoice cost of the standard automobile in the base locality, and (b) state and local sales or use taxes on the purchase of the automobile. The maximum standard automobile cost for a given taxable year is published in an annual notice.

(7) Annual mileage. Annual mileage is the total mileage (business and personal) a payor reasonably projects an employee will drive a standard automobile during a calendar year. Annual mileage equals the annual business mileage divided by the business use percentage.

(8) Annual business mileage. Annual business mileage is the mileage a payor reasonably projects an employee will drive a standard automobile in performing services as an employee during the calendar year, but may not be less than 6,250 miles for a calendar year. Annual business mileage equals the annual mileage multiplied by the business use percentage.

(9) Business use percentage. A payor determines the business use percentage by dividing the annual business mileage by the annual mileage. The business use percentage may not exceed 75 percent. In lieu of demonstrating the reasonableness of the business use percentage based on records of total mileage and business mileage driven by employees annually, a payor may use a business use percentage that is less than or equal to the following percentages for a FAVR allowance that is paid for the following annual business mileage:

Annual business mileage Business use percentage
6,250 or more but less than 10,000 45 percent
10,000 or more but less than 15,000 55 percent
15,000 or more but less than 20,000 65 percent
20,000 or more 75 percent

(10) Retention period. A retention period is the period in calendar years a payor selects during which the payor expects an employee to drive a standard automobile in performing services as an employee before the automobile is replaced. The period may not be less than two calendar years.

(11) Retention mileage. Retention mileage is the annual mileage multiplied by the number of calendar years in the retention period.

(12) Residual value. The residual value of a standard automobile is the projected amount for which it could be sold at the end of the retention period after being driven the retention mileage. The Service will accept the following safe harbor residual values for a standard automobile computed as a percentage of the standard automobile cost:

Retention period Residual value
2 years 70 percent
3 years 60 percent
4 years 50 percent

2014 California 540 Tax Forms – Personal Income Tax

540 Form 2014 California Resident Income Tax Return (Fill-in & Save)
540 Instructions 2014 Instructions for 540 Form, California Resident Income Tax Returns
540 Tax Table 2014 Tax Table for 540 Tax Return
540-2EZ Form 2014 California Resident Income Tax Return (Fill-in with math features & save)
540-2EZ Instructions 2014 Instructions for 540-2EZ Form, California Resident Income Tax Return
540-2EZ Tax Table 2014 Tax Table for 540-2EZ Tax Return
540-2EZ Formulario 2014 Declaración de Impuesto Sobre el Ingreso de Residente de California (Fill-in)
540-2EZ Instrucciones 2014 Instrucciones para el Formulario 540-2EZ, Declaración de Impuesto Sobre el Ingreso de Residente de California
540-ES Form 2014 Estimated Tax for Individuals (Fill-in & Save)
540-ES Instructions 2014 Instructions for 540-ES Form, Estimated Tax for Individuals
540-NR Form (Long) 2014 California Nonresident or Part-Year Resident Income Tax Return (Long) (Fill-in & Save)
540-NR Instructions (Long) 2014 Instructions for 540-NR Long Form, California Nonresident or Part-Year Resident Income Tax Return (Long)
540-NR Form (Short) 2014 California Nonresident or Part-Year Resident Income Tax Return (Short) (Fill-in & Save)
540-NR Instructions (Short) 2014 Instructions for 540-NR Short Form, California Nonresident or Part-Year Resident Income Tax Return (Short)
540-NR Tax Table 2014 Tax Table for 540-NR Tax Return

2015 Pension Plan Limitations

The Internal Revenue Service today announced cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2015. Many of the pension plan limitations will change for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged because the increase in the index did not meet the statutory thresholds that trigger their adjustment. Highlights include the following:

  • The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $17,500 to $18,000.
  • The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $5,500 to $6,000.
  • The limit on annual contributions to an Individual Retirement Arrangement (IRA) remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
  • The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $61,000 and $71,000, up from $60,000 and $70,000 in 2014. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $98,000 to $118,000, up from $96,000 to $116,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $183,000 and $193,000, up from $181,000 and $191,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
  • The AGI phase-out range for taxpayers making contributions to a Roth IRA is $183,000 to $193,000 for married couples filing jointly, up from $181,000 to $191,000 in 2014. For singles and heads of household, the income phase-out range is $116,000 to $131,000, up from $114,000 to $129,000. For a married individual filing a separate return, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
  • The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $61,000 for married couples filing jointly, up from $60,000 in 2014; $45,750 for heads of household, up from $45,000; and $30,500 for married individuals filing separately and for singles, up from $30,000.

Below are details on both the adjusted and unchanged limitations.

Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost‑of‑living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under Section 415. Under Section 415(d), the adjustments are to be made under adjustment procedures similar to those used to adjust benefit amounts under Section 215(i)(2)(A) of the Social Security Act.

Effective Jan. 1, 2015, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) remains unchanged at $210,000. For a participant who separated from service before January 1, 2015, the limitation for defined benefit plans under Section 415(b)(1)(B) is computed by multiplying the participant’s compensation limitation, as adjusted through 2014, by 1.0178.

The limitation for defined contribution plans under Section 415(c)(1)(A) is increased in 2015 from $52,000 to $53,000.

The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of Section 415(b)(1)(A). After taking into account the applicable rounding rules, the amounts for 2015 are as follows:

The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) is increased from $17,500 to $18,000.

The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C) and 408(k)(6)(D)(ii) is increased from $260,000 to $265,000.

The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan remains unchanged at $170,000.

The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5‑year distribution period is increased from $1,050,000 to $1,070,000, while the dollar amount used to determine the lengthening of the 5‑year distribution period remains unchanged at $210,000.

The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) is increased from $115,000 to $120,000.

The dollar limitation under Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over is increased from $5,500 to $6,000. The dollar limitation under Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over is increased from $2,500 to $3,000.

The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost‑of‑living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, is increased from $385,000 to $395,000.

The compensation amount under Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) is increased from $550 to $600.

The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts is increased from $12,000 to $12,500.

The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is increased from $17,500 to $18,000.

The compensation amount under Section 1.61‑21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation remains unchanged at $105,000. The compensation amount under Section 1.61‑21(f)(5)(iii) is increased from $210,000 to $215,000.

The Code also provides that several retirement-related amounts are to be adjusted using the cost-of-living adjustment under Section 1(f)(3). After taking the applicable rounding rules into account, the amounts for 2015 are as follows:

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for married taxpayers filing a joint return is increased from $36,000 to $36,500; the limitation under Section 25B(b)(1)(B) is increased from $39,000 to $39,500; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $60,000 to $61,000.

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing as head of household is increased from $27,000 to $27,375; the limitation under Section 25B(b)(1)(B) is increased from $29,250 to $29,625; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $45,000 to $45,750.

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for all other taxpayers is increased from $18,000 to $18,250; the limitation under Section 25B(b)(1)(B) is increased from $19,500 to $19,750; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $30,000 to $30,500.

The deductible amount under Section 219(b)(5)(A) for an individual making qualified retirement contributions remains unchanged at $5,500.

The applicable dollar amount under Section 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $96,000 to $98,000. The applicable dollar amount under Section 219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $60,000 to $61,000. The applicable dollar amount under Section 219(g)(3)(B)(iii) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0. The applicable dollar amount under Section 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $181,000 to $183,000.

The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(I) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) is increased from $181,000 to $183,000. The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $114,000 to $116,000. The applicable dollar amount under Section 408A(c)(3)(B)(ii)(III) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0.

The dollar amount under Section 430(c)(7)(D)(i)(II) used to determine excess employee compensation with respect to a single-employer defined benefit pension plan for which the special election under Section 430(c)(2)(D) has been made is increased from $1,084,000 to $1,101,000.

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