taxes

5 special taxes that target the wealthy

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Reduced deductions, exemptions
Reduced deductions, exemptions |  Onne van der Wal/Getty Images

Reduced deductions, exemptions

Wealthier taxpayers also stand to lose portions of their personal exemptions and itemized deductions.

These tax breaks are phased out at higher income levels. The trigger thresholds for exemptions and certain itemized deductions for the 2016 tax year are incomes in excess of:

  • $155,650 if married filing separately
  • $259,400 for single individuals
  • $285,350 if head of household
  • $311,300 if married filing jointly or a qualifying widow/widower

Personal exemptions — worth $4,050 each for yourself, spouse and any dependents for the 2016 and 2017 tax years — help reduce adjusted gross income to a lower taxable income amount. The exemptions shrink once income exceeds the trigger amount listed above.

Better-off taxpayers who itemize also could lose some of the value of common deductions, such as mortgage interest, state and local taxes paid and charitable donations.

The exemptions can be zeroed at completely at some very high income levels. That doesn't happen with the itemized deductions, though they could be reduced enough to cause wealthier filers some tax pain.

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