IRS Releases Annual Inflation Adjustments, Many Unchanged for 2010

The IRS has released its annual revenue procedure updating the tax bracket amounts and making inflation adjustments for various credits and other tax items (Revenue Procedure 2009-50). Because inflation has been minimal, many of the numbers are unchanged from 2009 or have only been adjusted slightly. The Social Security Administration also announced that the Social Security wage base will remain unchanged for 2010, at $106,800.

For tax years beginning in 2010, the standard deduction amounts are as follows: unmarried taxpayers, $5,700; married taxpayers filing jointly, $11,400; married taxpayers filing separately, $5,700; and heads of households, $8,400. For dependents, the standard deduction cannot exceed the greater of $950 or the sum of $300 plus the individual’s earned income.

Also updated are amounts for the kiddie tax; the earned income credit; the child tax credit; the adoption credit; the Hope scholarship, lifetime learning, and the new American opportunity credits; and more than 30 other items.

The IRS also announced that the annual benefit limit for defined benefit plans will remain unchanged at $195,000 for 2010. The annual benefit limit for defined contribution plans will also stay the same for 2010, at $49,000.