Today the IRS announced that several new changes would be in effect for tax year 2012. These changes were made due to inflation and will have an impact on nearly every taxpayer in the country.
Changes for tax year 2012 include:
- Personal and dependent exemptions will increase by $100 to $3,800
- Standard deductions have increased in all categories including a $300 increase for married couples filing jointly
- An increase in tax-bracket thresholds
- The maximum earned income tax credit will increase to $5,891 from $5,751
- An increase in the income phase out level for married couples that pay student loan interest
The IRS also announced an increase in the contribution limit for certain retirement accounts. In 2012, the new limit will be $17,000 per year, up from $16,500 in 2011. This new limit applies to 401(k)s, 403(b)s, the government’s Thrift Savings Plan and some 457 plans.
Other changes were also made to pension plans including an increase in the phase out range for Roth IRA Contributions. In 2011, married couples filing jointly that made more than $179,000 were not eligible to make Roth IRA contributions. This limit will be increased to $183,000 in 2012.