IRS Says Inflation to Have Little Effect on Tax Rates, Benefits for 2010

For over 50 years, Bloomberg BNA’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...

Federal tax rate brackets and various tax benefits will remain unchanged or change only slightly in 2010 due to inflation, IRS announces in Revenue Procedure 2009-50 and an accompanying news release (IR-2009-93). More than three dozen tax benefits are subject to inflation adjustments each year, but because recent inflation factors have been minimal, many of these benefits will remain unchanged or change only slightly for 2010, IRS says. The annual benefit limit for defined benefit plans will remain unchanged for 2010 at $195,000, and the annual benefit limit for defined contribution plans, at $49,000 in 2009, will stay the same in 2010, IRS announces in a news release (IR-2009-94). SSA announces that the maximum amount of earnings subject to Social Security tax will remain static at $106,800 in 2010 because there will be no cost-of-living adjustment for benefits due to the stagnant economy.