There are a number of items in the tax code that include inflation adjustment provisions, from the tax rate brackets set forth in section 1 to the "qualified transportation fringe" under section 132(f) and the limitation on deductible interest for student loans under section 221. Each year, the IRS publishes a revenue procedure that details the inflation adjustments for the upcoming year. Rev. Proc. 2009-50 and news release IR-2009-093 announced today that there will be little or no inflation adjustments in these various items for 2010 because inflation has not been a significant factor over the last year.
Similarly, there will be no COLA adjustments for Social Security, which has led some to suggest a lump sum payment to seniors of $250, to ease the pain no increase for the first time in decades,and consequently there will be a no-inflation benefit for current payors of the tax--the amount of earnings subject to tax will remain unchanged at $106,800. See 2010 Social Security Changes, www.socialsecurity.gov; Stagnant Prices Prevent Social Security Increase, Washington Post (Oct. 14, 2009).
Recent Comments