Image source: Getty Images.

Compared to years past, the tax changes coming in 2017 are relatively tame. There are, nevertheless, three broad categories of changes that everyday citizens should be aware of. With only two weeks left in 2016, it's important to take note of these changes, and prepare for them in the year ahead.

The maximum penalty from Obamacare inches ahead

No matter your opinion of the Affordable Care Act -- otherwise known as Obamacare -- and no matter its fate under the Trump presidency, you will be penalized for not holding a health insurance plan in 2017.

When Obamacare went into effect, the penalties for not having a plan were relatively tame. In 2014, the penalty was just $95 per uninsured adult or 1% of a household's adjusted gross income (AGI) -- whichever was greater. Over time, those penalties have inched higher and made it much more painful -- financially -- to ignore the individual mandate to get coverage.

The 2017 penalty for not having health insurance will be very similar to 2016's. For the current year, every uninsured adult in a household has to pay a $695 penalty; the penalty per child is $347.50. Either the combination of those two, or 2.5% of the household's AGI -- whichever is greater -- is the penalty. There is, for 2016, a cap on the total Obamacare penalty at $2,085 per household.

In 2017, the flat fees for adults, children, and the maximum cap will all be adjusted for inflation. Through October, the inflation rate has wrung in at about 1.6%, meaning the jumps will likely be modest -- depending on where inflation sits at year's end.

Medical expense deduction changes for those over 65

While retirees often have lower overall spending on housing, transportation, and food than their younger counterparts, it's no secret that many are very conscious of increases in their healthcare spending. In previous years, every penny a household spent over 7.5% of its AGI was tax deductible.

In other words, if a household's AGI was $60,000, and the retired couple spent $10,000 on medical expenses, much of it was deductible. Every healthcare expense above $4,500 (or 7.5% of the AGI) could be used to reduce taxes. For the couple in question, that would be equivalent to $5,500.

This year, however, the line that a household needs to cross is 10% of AGI. In other words, our example family would only have a deduction of $4,000 -- as the cap would have moved up to $6,000 of spending (10% of $60,000). It's still possible that the lower threshold could be restored by last-minute legislation, but for now, you should plan on seeing your medical deduction drop next year.

Tax brackets, exemptions, and deductions inch ahead

Finally, we've got the big three -- tax brackets, standard deductions, and exemptions -- all squeaking ahead by amounts to match inflation.

For 2017, the personal exemption advances to $4,050. The standard deduction depends on the filing status of your household.

Filing Status

Standard Deduction

Single and Married Filing Separately


Head of Household


Married Filing Jointly and Surviving Spouse


Data source: IRS

And while there are no major changes in tax brackets, it's worth checking out the numbers and remembering that if there's a change in your filing status -- if, for example, you got married or divorced -- it could mean big changes in your tax bill.

What I've included here is the upper limit for each tax bracket. You'll notice that I did not include the highest tax bracket (39.6%) because there is no upper limit. Every dollar your household earns over the 35% limit is subject to the highest taxable percentage.

Tax Bracket


Married Filing Separately

Head of Household

Married Filing Jointly and Surviving Spouses































Data source: IRS. 

While it might be too late to make drastic changes that could help you manage your 2016 tax bill, you can use these figure to help you prepare -- both financially and mentally -- for your 2017 tax year. With a new president and both houses of Congress being controlled by the same party, there's a high probability for big changes, but only time will tell what those changes will be.