The IRS released on October 28 its annual revenue procedure making inflation adjustments for various credits and other tax items (Rev. Proc. 2010-40). However, unlike in past years, the guidance does not include updated tax rate tables or updated amounts for the child tax credit, Hope scholarship and lifetime learning credits, earned income credit, standard deduction, overall limit on itemized deductions, qualified transportation fringe benefits, the personal exemption, or interest on education loans. The IRS says it will address those inflation adjustments in future guidance.
The IRS also released the 2011 pension plan limitations on October 28 (IR-2010-108).
Because inflation has been minimal, many of the inflation-adjusted numbers are unchanged from 2010 or have only been adjusted slightly.
The revenue procedure includes updated amounts for the kiddie tax; the adoption credit; the low-income housing credit; the annual gift tax exclusion ($13,000 for 2011); and 25 other items. The adjusted amounts are generally effective for tax years beginning in 2011.
The elective deferral (contribution) limit for employees who participate in Sec. 401(k), 403(b), or 457(b) plans and the federal government’s Thrift Savings Plan remains unchanged at $16,500. The catch-up contribution limit under those plans for those age 50 and over remains unchanged at $5,500.