Taxpayers may benefit from the newly announced COLA adjustments for 2012.Federal income tax brackets will jump higher and taxpayers will be able to set aside an additional $500.00 in their 401(k) plans in 2012. In summary, 401(k) and 457 plan contribution limits will increase to $17,000. Catch-up contribution limit for those aged 50 and over remains unchanged at $5,500 in 2012.
The IRS announcement on the COLA adjustments for 2012 also affect the standard deduction, the personal exemption and the 2012 tax bracket threholds as well. Personal and dependent exemption will increase from $3,700 to $3,800, the standard deduction for married couples will go from $11,600 to $11,900 and for single filers and couples who file separately the deduction will go from $5,800 to $5,950.
There are also changes in tax bracket threshholds, estate tax exemptions, gift tax, etc. For more information on these changes, please visit the IRS website.
