On December 23, the IRS released the 2011 tax rate tables and other inflation adjustments, which it had been holding while waiting for Congress to resolve various tax issues (Rev. Proc. 2011-12). With the enactment of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312), which extended the 2001 and 2003 tax rates and various expired and expiring provisions, the IRS had the information it needed to update the tax rate tables and other items.
In addition to new tax rate tables, reflecting the continuation of the 10%, 15%, 25%, 28%, 33% and 35% tax brackets, the revenue procedure contains adjusted amounts for the:
- Child tax credit;
- Hope scholarship, American opportunity, and lifetime learning credits;
- Earned income credit;
- Standard deduction;
- Personal exemption;
- Qualified transportation fringe benefits; and
- Phaseout of the deduction for interest on education loans.
The inflation-adjusted amounts apply to tax years beginning in 2011.
Many other inflation adjustments were released in October (Rev. Proc. 2010-40), including the kiddie tax; the adoption credit; the low-income housing credit; the annual gift tax exclusion ($13,000 for 2011); and 25 other items.