Key Tax Figures for 2010

1/7/2010

By Charles J. Garrison, CPA

Each year the IRS publishes updated figures for various deductions, limitations, and other indices. Below are some of the key figures for 2010, and what the change was, if any, from 2009:

• Old-age, survivors, and disability insurance (Social Security) wage base – $106,800 for 2010, the same as 2009. Compensation up to this amount is taxed at 6.2% to the employee and matched by the employer. Amounts over this base are not subject to Social Security taxes, but remain subject to the Medicare tax of 1.45%.
• 401(k) contributions – $16,500 limit on employee deferrals, the same as 2009. Also unchanged from 2009 is the Catch Up contribution for those at least 50 by the end of the tax year. This is the same $5,500 contribution limit as 2009.
• Compensation limit – Amounts up to $245,000 may be considered as compensation for 401(k) and some other retirement plans for purposes of employer matching and other contributions. Again, this amount is unchanged from 2009.
• Election to expense certain depreciable business assets (Section 179 depreciation expense) – The $250,000 expense limit and placed in service limit of $800,000 that has been enjoyed for the last two years ends in 2009. The expense limit for 2010 is $134,000 with a placed in service limit of $530,000. The $134,000 expense amount is reduced dollar for dollar by amounts placed in service over the $530,000 limitation.
• Business mileage rate – $.50 for 2010, a reduction of the $.55 reimbursement amount for 2009. This amount is impacted by, among other factors, the price of fuel which declined significantly in 2009 from the record levels seen in 2008.
• Estate and Generation Skipping Transfer (GST) taxes – These taxes are repealed for 2010, although the highest Gift Tax rate is 35%. The Estate and GST taxes and exclusions revert back to pre-2001 levels in 2011, unless Congress takes action during 2010. Changes will almost certainly pass Congress this year (the House passed a measure in December), and we will provide updates as they occur.