2017 Tax Season: A Complete Breakdown of Deductions and Credits That Could Save You Money

Tax season is here, and while most people dread filing, there’s good news — the government offers substantial tax breaks that could put money back in your pocket. If you understand how the 2017 standard deduction works and other available credits, you might end up with a refund instead of owing the IRS money.

Your Income Brackets Are Moving Up

One of the first things the IRS adjusts each year is the income thresholds for tax brackets. In 2017, these limits have shifted higher, which means you can earn more without bumping into a higher tax bracket. For married couples filing jointly, you can earn $600 more in 2017 compared to 2016 while staying in the 15 percent bracket. Single filers and heads of household also see similar adjustments. This inflation-driven change is automatic, so you benefit without doing anything extra.

The 2017 Standard Deduction Has Grown

The most straightforward way to reduce your taxable income is using the standard deduction — a fixed amount you can subtract from your adjusted gross income. The 2017 standard deduction has increased across all filing categories compared to 2016. For instance, married couples filing jointly get a higher deduction, as do single filers and those filing as heads of household. You have the choice between claiming the standard deduction or itemizing your deductions on Schedule A. If itemizing produces a bigger tax break, go that route. Either way, maximizing your deductions could lower your tax bracket if you’re close to the cutoff.

Personal Exemptions: Know the Phase-Out Limits

You can deduct a personal exemption for yourself and each dependent, though this amount remains unchanged at $4,050 in 2017. The catch: your exemptions phase out (decrease) if your adjusted gross income exceeds certain thresholds. For individuals, that threshold increased from $259,400 in 2016, and for married couples filing jointly, it rose from $311,300. Once your income surpasses the highest limit for your filing status, you can’t claim these exemptions at all. Understanding these phase-out limits helps you plan whether itemizing or using the standard deduction makes more sense for your situation.

Health Savings Accounts: Boost Your Tax-Advantaged Savings

If you’re enrolled in a high-deductible health plan, you can contribute pre-tax dollars to an HSA (Health Savings Account), which reduces your taxable income. The 2017 contribution limit for individuals increased by $50, from $3,350 in 2016 to $3,400. Family coverage remains at $6,750. The funds can be used tax-free for qualified medical expenses, making HSAs a powerful savings tool for healthcare costs while lowering your tax bill.

The Earned Income Tax Credit Just Got More Generous

For low to moderate-income earners with children, the Earned Income Tax Credit (EITC) is a significant opportunity. This refundable credit means if it exceeds your tax liability, the IRS sends you a check. In 2017, the maximum credit increased:

• $6,318 for three or more qualifying children (up from $6,269 in 2016)
• $5,616 for two qualifying children (up from $5,572 in 2016)
• $3,400 for one qualifying child (up from $3,373 in 2016)
• $510 for taxpayers with no children (up from $506 in 2016)

One important note: if you claim the EITC, expect your refund slightly later. Due to fraud prevention measures, the IRS delays these refunds until after February 15, so have your dependent documentation and Social Security numbers ready.

Estate Tax Exemption: Slightly Higher in 2017

For those with substantial assets, the federal estate tax exemption also increased in 2017. Your estate must exceed $5.49 million before federal estate taxes apply, up from $5.45 million in 2016. This modest increase reflects the annual inflation adjustment built into tax law.

What This Means for Your Tax Return

Understanding these 2017 tax changes gives you a strategic advantage. Whether you benefit most from a higher standard deduction, personal exemption adjustments, HSA contributions, or the Earned Income Tax Credit depends on your individual circumstances. The key takeaway: the tax code is designed with multiple breaks to reduce what you owe. Taking time to review which ones apply to you could result in a significantly larger refund or lower tax bill.