New Tax Year, New Tax Info
It’s a new tax year – what’s changed, what’s stayed the same? Here’s a quick overview.
Federal Income Tax
For 2017, Federal individual income tax rates are unchanged but other items have been adjusted for the upcoming year. Federal tax brackets, deductions, and exemptions have been adjusted for inflation. Also, the OASDI threshold was raised from $118,500 to $127,200 for 2017 with the rate remaining at 6.2%.
The mileage rates have been adjusted for 2017. The business mileage rate was lowered from $0.54/mile in 2016 to $0.535/mile in 2017. The deductible final move mileage rate was also lowered from $0.19/mile in 2016 to $0.17/mile in 2017. The charitable mileage rate remains unchanged at $0.14/mile.
State Taxes – Indiana, North Carolina, Maine
Three states have made changes to their individual marginal tax rates for 2017. First, Indiana lowered its flat marginal rate from 3.3% to 3.23% while North Carolina also lowered its flat marginal rate from 5.75% to 5.4999%. Meanwhile, Maine added a new fourth tax bracket to its tax tables for individuals with taxable incomes exceeding $200,000 with a rate of 10.15%. Maine’s previous top rate was just 7.15%.
NJ and PA: Tax Hike Avoided
And finally, if you missed the update, NJ Governor Chris Christie had previously announced that NJ would end its reciprocal agreement with PA effective 1/1/17, but late in 2016, he changed his mind and decided to keep the agreement in place. For states with reciprocal agreements, taxes are owed in the home state rather than in the work-state. Ending the agreement would have created a tax hike for thousands of commuters between the two states.