Table: 2015 phaseouts for individuals that create effective marginal tax rates (MTRs) different from statutory tax rates (STRs) Provision (estimated number in relevant AGI Code § Relevant Adjusted Gross Income (AGI) Range by Filing Status (see Notes) How Phaseout Works Effective MTR Low-Income Taxpayers 1) Phasein of earned income credit (7 million (M)) Phaseout of earned income credit (15 M) § 32 § 32(b)(3) § 32 § 32(b)(3) $0–$6,580a $0–$9,880a $0–$13,870a $0–$13,870a Joint: $13,750–$20,330 Single or Head of Household (HH): $8,240–$14,820 $23,630–$44,651 Single or HH: $18,110–$39,131 Joint: $23,630–$49,974 Single or HH: $18,110–$44,454 Joint: $23,630–$53,267 Single or HH: $18,110–$47,747 Credit: Earned income (EI) × 7.65% EI × 34% EI × 40% EI × 45% $503 – [7.65% × (EIb − $13,750)] $503 – [7.65% × (EIb − $8,240)] $3,359 –[15.98% × (EIb − $23,630)] $3,359 –[15.98% × (EIb − $18,110)] $5,548 –[21.06% × (EIb − $23,630)] $5,548 –[21.06% × (EIb − $18,110)] $6,242 –[21.06% × (EIb − $23,630)] No children: Statutory rate − 7.65% One child: Statutory rate − 34% Two children: Statutory rate − 40% Three or more children: Statutory rate − 45% No children: Statutory rate + 7.65% One child: Statutory rate + 15.98% Two children: Statutory rate + 21.06% Three or more children: Statutory rate + 21.06%
$6,242 –[21.06% × (EIb − $18,110)] Provision (estimated number in relevant AGI range) Code § Relevant Adjusted Income (AGI) Range by Filing Status How Phaseout Effective MTR 2) Limited phaseout of dependent care credit (2 M) § 21 $15,000–$43,001 Dependent care credit: $Dep. care expenses × [0.35 – [0.15 × [(AGI – 15,000) ÷ 30,000]] (round up to whole %. Max. = 0.15. Min. = 0)] Max. $Dep. care expenses = $3,000 if one qualifying person. Max. $Dep. care expenses = $6,000 if two or more qualifying persons. Statutory tax rate + 1.5% (assumes maximum credit (i.e., taxpayer’s qualifying expenses are $3,000 for one qualifying person)) Statutory tax rate + 3% (assumes maximum credit (i.e., taxpayer’s total qualifying expenses are $6,000 for ≥ two qualifying persons)) 3) Phaseout of credit to pay health care premium purchased on the “exchange” § 36B Varies (Individuals whose household income is at least 100% but not more than 400% of the poverty line who aren't eligible for Medicaid or employer-sponsored insurance) Premium assistance credit: Premium for a “benchmark plan” “expected contribution” Varies Retirement Related 4) Phaseout of elderly or disabled credit (< 0.1 M) § 22 Single or HH: $7,500–maximum of $17,500 Joint: $10,000–max. of $20,000c varies Statutory rate + 7.5% 5) Phaseout of social security (S.S.) benefits exclusion (7 M) § 86 Single or HH: $25,000–variousd $32,000–variousd Single or HH: $34,000–variousd Taxable S.S. benefits: 50% × (Provisional income – 25,000) 50% × (Provisional income – 32,000) Lesser of 50% × (S.S.benefits) or $4,500 + 85% × (Prov. inc.– 34,000). Statutory rate (for first tier) × 1.5 Statutory rate (for second tier) × 1.85
13) Phaseout of child credit (1 M) § 24 Single or HH: $75,000 – variousi $110,000 – variousi Child credit phased out: [(AGI − 75,000) ÷ 1,000](round up to whole number) × $50 [(AGI − 110,000) ÷ up to whole number) × $50 Statutory rate + 5% Provision (estimated number in relevant AGI range) Code § Relevant Adjusted Income (AGI) Range by Filing Status How Phaseout Works Effective MTR 14) Phaseout of allowable rental real estate loss deduction (Not available) § 469(i) $100,000 – $150,000i Maximum allowable deduction: $25,000 × [1 – (AGI – $100,000) ÷ $50,000] Statutory rate × 1.5 (assuming maximum deduction of $25,000 if not for phaseout)q 15) Phaseout of adoption credit (Not available) § 23 $201,010 – $241,010i Credit: $Adoption expenses (maximum $13,400) × [1 − (AGI − $197,880) ÷ $40,000] Credit: Statutory rate + 0.335 (assumes maximum credit of $13,400 if not for phaseout)r 16) 10% floor for medical deductions (11 M) § 213 Any taxpayer claiming medical deductions Deduction phased out: 10% × AGI (7.5% if taxpayer is age 65 or over) Statutory rate × 1.10 (1.075 if taxpayer is age 65 or over) 17) 2% for miscellaneous deductions (12 M) § 67 Any taxpayer claiming miscellaneous deductions subject to the 2% floor Deduction phased out: 2% × AGI Statutory rate × 1.02 18) 10% floor for casualty loss deductions (0.1 M) § 165 (h)(2) Any taxpayer claiming casualty loss deductions Deduction phased out: 10% × AGI Statutory rate × 1.10