US tax regulations can change due to a number of factors, including not only the tax reform pending, there have been continuous new updates to Congress’ Internal Revenue Code, but also new regulatory interpretations from the IRS and Treasury Department, new revenue procedures issued by the IRS, and new case law rulings decided in federal court. With so many different governing bodies impacting the laws of taxation, it is necessary for all taxpayers to stay up to date on tax regulations and incentives.
Although 2016 didn’t bring many drastic differences to the US tax code, it did see a significant increase in the amount of tax penalties levied under the Affordable Care Act. The fine for individuals lacking qualifying health insurance began at $95 per adult in 2014, but has since risen to $695 or 2.5 percent of one’s income, with a family maximum penalty set at $2,085. However, American workers can now increase their contributions to family health savings accounts by $100, as the maximum contribution to these policies has increased to $6,750. Hopefully these drastic requirements will be repealed under the pending tax reform.
Decreased inflation rates have driven a modest increase in tax deductions for individuals filing as a head-of-household. After a $50 increase, the standard head-of-household deductions now sits at $9,300. The personal tax exemption has also risen by $50 to reach $4,050. Taxpayers qualifying for deductions under the Earned Income Tax Credit will also enjoy an increase in the maximum credit amounts. Families with one child, two children, and three children can now receive up to $3,373; $5,572; and $6,269, respectively.