The IRS released on October 20 its annual revenue procedure making inflation adjustments to the income tax tables and many tax credits and other items for tax years beginning in 2012 (Rev. Proc. 2011-52).
The IRS also announced separately the 2012 contribution limits and other figures for pension plans and other retirement-related items (IR-2011-103).
The increases were greater than in the previous two years, when inflation was lower. In 2011, many items were unchanged from the previous year.
Besides revised income tax tables, the new revenue procedure includes updated amounts for various items, such as the personal exemption (which increases from $3,700 to $3,800) and standard deduction. The revenue procedure also gives new figures for the child tax credit; American opportunity and lifetime learning credits; and the earned income credit—40 items in all.
The $13,000 annual gift exclusion is unchanged, although the estate and gift lifetime exclusion for decedents dying during 2012 goes up from $5 million to $5.12 million.
The elective deferral (contribution) limit for employees who participate in section 401(k), 403(b) or 457(b) plans and the federal government’s Thrift Savings Plan increases from $16,500 to $17,000. The catch-up contribution limit under those plans for those age 50 and over is unchanged at $5,500.
On October 19, the Social Security Administration announced that the Social Security wage base for 2012 will be $110,100 (up from $106,800 in 2011).