While the shape of tax policy remains uncertain in some areas - at press time, Congress was considering a wide range of tax bills, including changes to the estate tax regime, and the extension of a number of tax credits and deductions, among other things - there are a few areas of certainty.
To start, the IRS has issued its 2010 optional standard mileage rates. Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car, van, pickup truck or panel truck will be:
* 50 cents per mile for business purposes;
* 16.5 cents per mile for medical or moving purposes; and,
* 14 cents per mile in service of charitable organizations.
Looking even further into the future, more than three dozen tax benefits are subject to inflation adjustments each year, but because recent inflation factors have been minimal, many of these will remain unchanged or change only slightly for 2010.
Key provisions affecting 2010 returns, filed by most taxpayers in early 2011, include the following:
* The value of each personal and dependency exemption available to most taxpayers is $3,650, unchanged from 2009.
* The new standard deduction for heads of household is $8,400, up from $8,350 in 2009. For other taxpayers, the standard deduction remains unchanged at $11,400 for married couples filing a joint return and $5,700 for singles and marrieds filing separately.
* Various tax bracket thresholds will see minor adjustments. For example, for a married couple filing jointly, the threshold separating the 15 percent bracket from the 25 percent bracket is $68,000, up from $67,900 in 2009.
* The annual gift tax exclusion remains unchanged at $13,000.
The IRS also announced cost-of-living adjustments applicable to dollar limitations for pension plans and other items for tax year 2010. Other limitations applicable to deferred-compensation plans are also affected by adjustments under Code Section 415.
The limitations that are adjusted by reference to Sec. 415(d) will remain unchanged.
Effective Jan. 1, 2010, the limitation on the annual benefit under a defined-benefit plan under Sec. 415(b)(1)(A) remains unchanged at $195,000. For participants who separated from service before Jan. 1, 2010, the limitation for defined-benefit plans under Sec. 415(b)(1)(B) is computed by multiplying the participant's compensation limitation, as adjusted through 2009, by 1.0000.
The limitation for defined-contribution plans under Section 415(c)(1)(A) remains unchanged for 2010 at $49,000.
