Under one such provision -- often referred to as "Pease," after a former congressman -- high-income taxpayers begin to lose certain itemized deductions once their adjusted gross income reaches a certain level. For 2007, that threshold is projected to rise to $156,400, up from $150,500 in 2006. For married taxpayers filing separate returns, the threshold for 2007 is expected to be $78,200, up from $75,250.
Another stealth tax that will be affected by inflation adjustments is known as "Pep," an acronym for the personal exemption phase-out. The personal exemption amount for 2007 is projected to rise to $3,400 from $3,300, according to the three tax analysts. The phase-out for joint returns is likely to begin at adjusted gross income of $234,600, up from $225,750 in 2006. For singles, the threshold is expected to be $156,400, up from $150,500. For married taxpayers filing separately, it will be $117,300, up from $112,875.
Additionally, a law that became effective this year makes Pease and Pep less painful: Taxpayers affected by these provisions lose only two-thirds of the itemized deductions and personal-exemption amounts that would otherwise be lost under the old law.
Nearly two-thirds of all taxpayers claim the basic "standard" deduction each year, instead of itemizing. For 2007, this deduction is expected to rise to $10,700 for joint returns from $10,300 in 2006, according to the three tax analysts. For most singles, the amount is expected to rise to $5,350 from $5,150.
More people will be eligible to contribute to Roth IRAs next year. The maximum annual contribution gets phased out for taxpayers with income above certain levels. For joint filers, the allowable Roth IRA contribution will be phased out in 2007 for those with income between $156,000 and $166,000, up from between $150,000 and $160,000 in 2006, according to RIA, a unit of Thomson Corp. For most singles, it will be phased out for those with income between $99,000 and $114,000 in 2007, up from between $95,000 and $110,000 in 2006.
The three private-sector number-crunchers are Mr. Jones of CCH; William Massey, RIA senior tax analyst at Thomson Tax & Accounting; and James C. Young, a professor of accountancy at Northern Illinois University in DeKalb, Ill. More details can be found on the Web sites of CCH (cch.com) and RIA (ria.thomson.com/News/federal.asp).
The three private-sector number-crunchers are Mr. Jones of CCH; William Massey, RIA senior tax analyst at Thomson Tax & Accounting; and James C. Young, a professor of accountancy at Northern Illinois University in DeKalb, Ill. More details can be found on the Web sites of CCH (cch.com) and RIA (ria.thomson.com/News/federal.asp).