Six Changes We Definitely Know for 2015

Regardless of what your situation looked like in 2014, there are six changes that will affect a large number of taxpayers starting in January 2015.

1) Health Insurance Penalty. Part of the Affordable Care Act mandates that all Americans have health insurance or pay a tax penalty as a result. In 2014, the penalties were 1% of your household income or $95 per person – whichever is greater. But in 2015, those penalties ramp up significantly to 2% of total household income, or $325 per person. That can really add up for a middle-class family. If you’re still not covered and paid a penalty on your 2014 taxes, make sure you get health insurance ASAP to avoid further penalties as we finish out 2015.

2) 401(k) Limits. The limit on employee contributions to a 401(k) plan will increase to $18,000, up $500 from 2014’s limits. Be sure to contact your employer to make adjustments to maximize your contribution. The “catch-up” allowance for those age 50 or older has also been increased. An additional $6,000 in contributions instead of the previous $5,500 cap can be made. These new contribution levels are also applicable to 403b accounts and most 457 retirement plans as well.

3) Flexible Spending Account Limits. The annual limit on employee contributions to flexible spending accounts for 2015 is now $2,550 for qualified health care expenses. That’s up $50 from 2014. If you take advantage of a health care FSA make sure to take advantage of the new maximum amount.

4) Standard Deduction. The standard deduction – that is, the basic tax break extended to all taxpayers each year -- rises to $6,300 for single filers and $12,600 for married taxpayers filing jointly in 2015. That’s up $100 and $200, respectively, from 2014 levels.

5) Personal Exemption. The personal exemption amount also goes up for 2015. The personal exemption for 2015 is $4,000, up from $3,950 in 2014

6) Tax Brackets. For the new 2015 tax year beginning in January, income tax thresholds have again been adjusted up for inflation. The highest tax rate of 39.6%, for instance, will now apply to single filers who make over $413,200 and married couples making $464,850. Both figures are up about 1.6% from tax year 2014.