IRS Releases Inflation Adjustments for 2014

On Thursday, the IRS issued the annual inflation adjustments for 2014 for more than 40 tax provisions and the tax tables for 2014 (Rev. Proc. 2013-35).

Among the inflation-adjusted amounts that have increased are the personal exemption, which increased from $3,900 in 2013 to $3,950 for 2014, and the standard deduction, which for married filing jointly status increased from $12,200 in 2013 to $12,400 in 2014. In addition, the adoption credit under Sec. 23 is inflation-adjusted from $12,970 in 2013 to $13,190 in 2014.

The revenue procedure also contains the inflation-adjusted unified credit against the estate tax, which is $5.34 million for 2014. The annual gift tax exclusion remains at $14,000.

The AMT exemption amount for 2014 is $82,100 for married taxpayers filing joint returns and $52,800 for single taxpayers. The Sec. 911 foreign earned income exclusion increases to $99,200 for 2014 from $97,600 for 2013.

The revenue procedure also includes the inflation adjustments for the Sec. 24 child tax credit, the Sec. 25A Hope scholarship and lifetime learning credits, the Sec. 32 earned income tax credit, the Sec. 179 election, and the Sec. 221 interest on education loans.

The IRS also announced the 2014 contribution limits and other figures for pension plans and other retirement-related items (IR-2013-86). The elective deferral (contribution) limit for employees who participate in Sec. 401(k), 403(b), or 457(b) plans and the federal government’s Thrift Savings Plan remains unchanged at $17,500, as does the catch-up contribution limit under those plans for those age 50 and over, which stays at $5,500.

On Wednesday, the Social Security Administration announced that the Social Security wage base for 2014 will be $117,000 (up from $113,700 in 2013).