United States: Summary of key 2014 and 2015 federal tax rates and limits

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1 from Global Mobility United States: Summary of key 2014 and 2015 federal tax rates and limits January 28, 2015 In brief The following is a high-level summary of some key individual tax rates and applicable limits for 2014 and For purposes of this Tax Insight, the reference to '$' means US dollars. Further: MFJ means married filing jointly MFS means married filing separately HOH means head of household. This compilation is intended to serve as a handy reference guide for companies with globally mobile workforces as they prepare for US individual tax filings relating to 2014, as well as planning for In detail FICA taxes Social Security (SS) wage base $117,000 $118,500 SS maximum - 6.2% $7, $7, Medicare %* No ceiling No ceiling * See below, under 'Additional Medicare tax', for details on an increase in the Medicare tax that applies to wages and other compensation only in of an applicable threshold amount. Additional Medicare Tax A 0.9% tax* is imposed on individual wages and other compensation in of the following threshold amounts: Single $200,000 Single $200,000 MFJ $250,000 MFJ $250,000 MFS $125,000 MFS $125,000 HOH $200,000 HOH $200,000 *The tax was imposed under the Patient Protection and Affordable Care Act of

2 Tax on net investment income A 3.8% tax is imposed on the lesser of net investment income or the of MAGI* over the following threshold amounts: Single $200,000 Single $200,000 MFJ $250,000 MFJ $250,000 MFS $125,000 MFS $125,000 HOH $200,000 HOH $200,000 *Modified adjusted gross income. The Unearned Income Medicare Contribution, otherwise known as the net investment income tax (NIIT), was imposed under the Patient Protection and Affordable Care Act of Personal exemption (PE) Personal exemption: $3,950 $4,000 PE phase-out Single $254,200 Single $258,250 The phase-out of personal exemptions begins when adjusted gross income (AGI) reaches: MFJ $305,050 MFJ $309,900 MFS $152,525 MFS $154,950 HOH $279,650 HOH $284,050 For 2014, the phase-out of personal exemption ends at $376,700 for single individuals, $427,550 for married persons filing jointly, $402,150 for heads of households, and $213,775 for married individuals filing separate returns. For 2015, the phase-out of personal exemption ends at $380,750 for single individuals, $432,400 for married persons filing jointly, $406,550 for heads of households, and $216,200 for married individuals filing separate returns. Standard deduction Standard deduction: Single $6,200 Single $6,300 MFJ $12,400 MFJ $12,600 MFS $6,200 MFS $6,300 HOH $9,100 HOH $9,250 2 pwc

3 Itemized deductions The reduction of itemized (not standard) deductions by 3% of AGI in of the following amounts*: Single $254,200 Single $258,250 MFJ $305,050 MFJ $309,900 MFS $152,525 MFS $154,950 HOH $279,650 HOH $284,050 *A taxpayer may not lose more than 80% of his or her deductions as a result of the reduction in the itemized deduction amounts. For tax years 2013 and later, new rules may affect medical expense deductions that are itemized on Form 1040, Schedule A. The new rules raise the threshold that unreimbursed medical and dental expenses must reach before a deduction is permitted from 7.5% to 10% of adjusted gross income. A temporary exemption applies for individuals age 65 and older until December 31, Beginning January 1, 2017, the 10% threshold will apply to all taxpayers, including those 65 and over by the end of the taxable year. Standard mileage rates Standard mileage rates: business $0.56 business $0.575 charitable $0.14 charitable $0.14 medical & moving $0.235 medical & moving $0.23 Section Annual exclusion: $99,200 $100,800 Base housing amount: $15,872 $16,128 Standard qualified housing expense limit*: $29,760 $30,240 *Adjustments to the limitation are provided for certain countries with high housing costs adjusted limitations are included in Notice ; 2015 adjusted limitations are yet to be announced. Expatriation to avoid tax year average annual net income tax in of the following amount: $157,000 $160,000 Amount includible in gross income of covered expatriate is reduced by*: $680,000 $690,000 *but not below zero 3 pwc

4 Gift tax limits Annual exclusion from total amount of taxable gifts*: $14,000 $14,000 Annual exclusion for gifts to non-us citizen spouses*: $145,000 $147,000 *This amount is per donor and per donee and refers to gifts that are not future interests in property. Alternative minimum tax Alternative minimum tax exemption amounts (subject to phase-out described in the table below): Single $52,800 Single $53,600 MFJ $82,100 MFJ $83,400 MFS $41,050 MFS $41,700 HOH $52,800 HOH $53,600 Alternative minimum tax phase-out The phase-out of the AMT exemption amount begins when the alternative minimum taxable income exceeds the following amounts: Single $117,300 Single $119,200 MFJ $156,500 MFJ $158,900 MFS $78,250 MFS $79,450 HOH $117,300 HOH $119,200 Capital gains tax Long term: 15%/20%* 15%/20%* Lower income taxpayers: 0% 0% Short term: Ordinary rates Ordinary rates * The 20% capital gains rate applies only if a taxpayer's income tax rate falls in the 39.6% bracket. All other taxpayers continue to be subject to a maximum 15% capital gains rate. A 0% capital gains rate applies to taxpayers who are subject to income tax rates of 15% or less. Qualified dividends Qualified dividend rate: 15%/20%* 15%/20%* Lower income taxpayers: 0% 0% Nonqualified dividends: Ordinary rates Ordinary rates * The 20% dividend rate applies only if a taxpayer's income tax rate falls in the 39.6% bracket. All other taxpayers continue to be subject to a maximum 15% dividend rate. A 0% dividend rate applies to taxpayers who are subject to income tax rates of 15% or less. 4 pwc

5 Child tax credit Child tax credit: $1,000 $1,000 The child tax credit is subject to phase-out for individuals with income over certain threshold amounts. Supplemental withholding flat rates Supplemental wages up to $1,000,000 (optional): 25% 25% Supplemental wages greater than $1,000,000 (mandatory): 39.6% 39.6% Federal income tax rates* Married filing jointly & surviving spouses Married filing jointly & surviving spouses , % 0 18, % 18,150 73,800 1, % 18,450 74,900 1, % 73, ,850 10, % 74, ,200 10, % 148, ,850 28, % 151, ,450 29, % 226, ,100 50, % 230, ,500 51, % 405, , , % 411, , , % 457, , % 464, , % Single Single , % 0 9, % 9,075 36, % 9,225 37, % 36,900 89,350 5, % 37,450 90,750 5, % 89, ,350 18, % 90, ,300 18, % 186, ,100 45, % 189, ,500 46, % 405, , , % 411, , , % 406, , % 413, , % 5 pwc

6 Married filing separately Married filing separately , % 0 9, % 9,075 36, % 9,225 37, % 36,900 74,425 5, % 37,450 75,600 5, % 74, ,425 14, % 75, ,225 14, % 113, ,550 25, % 115, ,750 25, % 202, ,800 54, % 205, ,425 55, % 228,000 63, % 232,425 64, % Head of household Head of household , % 0 13, % 12,950 49,400 1, % 13,150 50,200 1, % 49, ,550 6, % 50, ,600 6, % 127, ,600 26, % 129, ,850 26, % 206, ,100 48, % 209, ,500 49, % 405, , , % 411, , , % 432, , % 439, , % *2015 rate tables are provided in Rev. Proc Special note about legal same-sex marriages Beginning with the 2013 tax year (and earlier years in certain circumstances), same-sex couples legally married in jurisdictions that recognize their marriages are treated as married for federal tax purposes, including income and gift and estate taxes. This status is awarded regardless of whether the couple currently lives in a jurisdiction that recognizes samesex marriage or a jurisdiction that does not. The status does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law. Legally-married same-sex couples typically must file their 2013 or later federal income tax returns (and earlier years in certain circumstances) using either the married filing jointly or married filing separately filing status. Also, individuals who were in same-sex marriages may, but are not required to file original or amended returns choosing to be treated as married for federal tax purposes for prior tax years still open under the statute of limitations. 6 pwc

7 Let s talk For a deeper discussion of how this issue might affect your business, please contact your regular PwC Global Mobility engagement team or one of the following Global Mobility professionals: Global Mobility Services Peter Clarke, Global Leader (203) peter.clarke@us.pwc.com Evelyn Behrend (267) evelyn.behrend@us.pwc.com Al Giardina (203) alfred.giardina@us.pwc.com Clarissa Cole (213) clarissa.cole@us.pwc.com Derek Nash (202) derek.m.nash@us.pwc.com SOLICITATION This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC does do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see for further details. 7 pwc