Franklin County Sales Tax Increase Approved
Following a .25% state-wide sales tax increase that took effect on Sept. 1, 2013, Franklin County Commissioners approved a two-piece .5% sales tax increase on Sept. 24, 2013.
The first piece of the increase is a .25% permanent increase, the second piece is a .25% temporary increase set to expire on Dec. 31, 2018.
This takes Franklin County’s combined state and county sales tax rate to 7.5% effective on January 1, 2014, second highest in the state only to Cuyahoga County’s 8% rate.
The temporary part of the increase is earmarked for a new $150 million jail, $50 million morgue and lab, and provide seed money for a proposed economic development fund.
That $25,000 car purchased in December 2013 will cost $125 less than it will if purchased in January 2014. The $100k piece of equipment will cost $500 less in 2013 than in 2014.
No Increase For 401(k) and IRA Contributions In 2014
The maximum 401(k) contribution for 2014 remains unchaged at $17,500. IRA contribution limits are also unchanged at $5,500. Additional catch-up contributions are unchanged as well at $5,500 and $1,000 for 401(k)’s and IRA’s, respectively. SIMPLE maximum deferral remains at $12,000 as well.
Income limitations on IRA and Roth IRA contributions are increased by inflation adjustments for 2014, details can be found in IR-2013-86.
IRS Announces 2014 Tax Brackets and Other Inflation Adjusted Items
On Oct. 31, the IRS announced the 2014 federal income tax brackets along with many of the other annually inflation adjusted tax items.
The brackets do not expand dramatically next year. For instance, $100k of taxable income in 2013 costs $21,293 for federal income tax on a single taxpayer…in 2014, the same $100k income will only cost $21,176, a savings of $117. The personal exemption increases $50 to $3,950, and standard deductions increase $100 for singles, $200 for marrieds, and $150 for head of household filers.
The annual exclusion for gifts stay at $14k for 2014, and the estate tax exemption increases to $5.34 million from $5.25 million in 2013.
The Revenue Procedure also describes the normal annual changes to many other taxes, everything from arrow shafts to airline tickets.
2014 Social Security Wage Base and COLA Increase on SS Benefits Announced
The SSA announced the 2014 cost of living adjustment increase for SS benefits will be 1.5% on Oct. 30th.
The wage base for Social Security taxes in 2014 will increase to $117,000 from $113,700.
US Federal Income Tax Turns 100 Years Old
The U.S. federal income tax turned 100 on October 3, 2013…100 years after President Woodrow Wilson signed it into law. Back then, the base tax rate was 1% maxing out at 6%. Deductions were allowed for interest on personal loans and state and local taxes in addition to standard deductions of $3,000 for singles ($4,000 if married). The instructions on preparing the three-page tax return were all on one page. The instructions grew to 14 pages in the next fifty years, and 2012’s weigh in at 214 pages. In a few months, we’ll know how many pages it takes to begin to explain 2013.
This early romantic version of the federal income tax ended fairly quickly. By the time WWI was over, incomes over $1 million were taxed at 77%.
Now that sounds more familiar.
Tax Enforcement Continues to Decline
In a recent Treasury Inspector General for Tax Administration (TIGTA) report, the Inspector General found that a recent decrease in revenue agents and tax compliance officers contributed to a decrease in examinations overall. Although a greater number of partnership and corporation tax returns were examined, fewer individual tax returns were reviewed during 2011 and 2012. Citing challenges that include approximately 50 provisions in the Affordable Care Act that add to or amend the Internal Revenue Code, a decrease in the number of field agents, and continued funding decreases, fewer hours are available for enforcement. The report indicated better collections procedures resulting in increased cash flow on existing tax debts, but also noted that the amount owed in aggregate has grown 46% in the past five years. No recommendations were made with the report, and IRS officials did not provide any comments on it after having the opportunity to review the draft.
