Tax Changes in 2014

Last updated on January 7, 2014

As many as fifty-five tax breaks expired in 2013. Many of these were initiated by the Bush administration and were supposed to expire earlier, but were extended by Congress. Some of the notable tax breaks to expire in 2013 include the tax credit for research and development and renewable energy tax credit.

The tax deduction for teachers on school purchases also ended with 2013. A tax exemption to financial institutions such as banks and insurance companies that allowed them to keep their foreign profits untouched by U.S. taxes has also expired.

The top tax rate has increased for taxpayers in 2014. Single individuals with an income of over $400,000 will now need to pay at a rate of 39.6%. The upper limit for those filing jointly is $450,000. These rates have not been increased, but have come back to normal due to the expiry of the Bush tax cuts that were extended until the end of 2013.

In 2014, Medicare surtax of 0.9% will be charged to individuals whose income is more than $200,000. For those filing jointly, the limit is $250,000.

Many tax breaks that taxpayers had been using for years ended in 2013. This means many taxpayers will be paying more taxes in 2014. Tax planning goes a long way to ensure taxpayers save as much as they can in taxes. Therefore, taxpayers must plan, organize and keep their expenditure receipts in place to take the maximum tax advantage for the 2014 tax year.