June 8, 2015 8:05 am

Tax Nostalgia

While many tax limits and threshold amounts are fixed by the Tax Code, a great many others are adjusted annually for inflation by law or IRS discretion. Despite the fact that the rate of inflation has been very low in recent years, over time some tax limits have changed dramatically. The information in the following table gives you a perspective on how some of these tax limits have changed over the past 25 years.

Tax item

1990

2015

Top individual income tax rate 33% 39.6%
Kiddie tax threshold for investment income $1,000 $2,000
Personal exemption amount $2,050 $4,000
Standard deduction amounts

  • Joint filers/qualifying widow(er)
  • Heads of households
  • Singles
  • Married filing separately
$5,450$4,750

$3,250

$2,725

$12,600$9,250

$6,300

$6,300

Additional standard deduction for age/blindness

  • Married
  • Unmarried
$650/spouse$800 $1,250$1,550
Standard deduction for dependent (<65/not blind) $500  $1,050
Social Security wage base $51,300 $118,000
IRS mileage rate

  • Business driving
  • Medical/moving
26¢ per mile9¢ per mile 37.5¢ per mile23¢ per mile
401(k) elective deferral from salary $7,979 $18,000 ($24,000 for those 50+)
IRA contribution $2,000 $5,500 ($6,500 for those 50+)
SEP contribution $30,000 $53,000
First-year expensing (Sec. 179 deduction) $10,000 $25,000 (or $500,000 if the 2014 limit is extended)
Foreign earned income exclusion $70,000 $100,800
Annual gift tax exclusion $10,000 $14,000
Estate tax exemption $600,000 $5,430,000

 

Conclusion

While many dollar limits have kept pace, more or less, with inflation, other limits have remained unchanged. Examples: $3,000 capital loss deduction limit; $5,250 exclusion for employer-provided education assistance. This means that the true benefit of these tax breaks has diminished considerably over time. However, with a new Congress, comprehensive tax reform may be in the offing, and hopefully all dollar limits will be reviewed and adjusted accordingly.

advertisement
Tax Glossary

Child and dependent care credit

A credit of up to 30% based on certain care expenses incurred to allow you to work.

More terms