The U.S. Bureau of Labor Statistics reported today that the consumer price index (CPI) has dropped off by just .1% for the month of August. The index for all items less food and energy increased 0.1% in August, the same as the previous month. So what’s the reason for the dip? A sharp decline in the price of gasoline: before seasonal adjustment, gasoline prices declined 5.4% in August. Overall, however, over the last 12 months, the all items index rose 0.2% before seasonal adjustment.
The CPI measures the cost of goods and services. When the CPI doesn’t change much, it tends to signal that interest rates will stay put. This is important for taxpayers because the Tax Code provides for mandatory annual adjustments to certain tax items based on inflation. Of those tax items subject to mandatory annual adjustments, federal income tax brackets tend to get the most attention since have been subject to adjustment for nearly 30 years. However, inflation adjustments are now routinely included in new tax legislation which can be confusing for taxpayers. Luckily, there are tax professionals out there who can sort it all out for you.
2016 Tax Rates
2016 Tax Brackets
2016 Tax Exemptions