The IRS recently announced inflation adjustments for several tax provisions related to income and estate planning.
- Personal and dependent exemption. The value of each personal and dependent exemption is $3,800, up $100 from 2011.
- Standard deduction. The new standard deduction is $11,900 for married couples filing a joint return, $5,950 for singles and married individuals filing separately, and $8,700 for heads of household.
- Tax-bracket thresholds. Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $70,700, up from $69,000 in 2011.
- Estate tax exclusion. For an estate of any decedent dying during calendar year 2012, the basic exclusion from estate tax amount is $5,120,000, up from $5,000,000 for calendar year 2011.
- Special use valuation for real estate. If the executor chooses to use the special use valuation method for qualified real property, the aggregate decrease in the value of the property resulting from the choice cannot exceed $1,040,000, up from $1,020,000 for 2011.
- Annual Exclusion for Gifts. The gift tax annual exclusion remains at $13,000.
See Rev. Proc. 2011-52 (Nov. 7, 2011).