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Each year, the dollar amounts for a variety of tax provisions are adjusted to keep pace with inflation. The adjustments affecting 2012 tax returns, filed in 2013, include the following:

  • The personal and dependent exemption increased $100, from $3,700 to $3,800.
  • The standard deduction for married couples filing a joint return increased to $11,900, up $300; the deduction for singles and married individuals filing separately increased to $5,950, up $150; and the deduction for heads of household increased to $8,700, up $200.
  • The elective deferral limit for employees who participate in section 401(k), 403(b) or 457(b) plans increased $500 to $17,000 annually. The catch-up contribution limit under those plans for those aged 50 and over remains at $5,500. In addition, the income phase-out for those who contribute to a Roth IRA increased. The phase-out range for married couples filing jointly is $173,000–$183,000, up from $169,000–$179,000. The phase-out range for singles and heads of household is $110,000–$125,000, up from $107,000–$122,000.
  • For 2012, the maximum earned income tax credit (EITC) for low- and moderate-income workers rose from $5,751 to $5,891. The maximum income limit for the EITC rose from $49,078 to $50,270. The amount of the credit varies depending on family size and filing status.
  • The modified adjusted gross income threshold for the lifetime learning credit increased, and now begins to phase out at $104,000 for joint filers, up $2,000 from 2011, and $52,000 for singles and heads of household, up $1,000 from 2011.
  • The $2,500 maximum deduction for student loan interest paid begins to phase out at $125,000 for married taxpayers filing a joint return and phases out entirely at $155,000, which is an increase of $5,000 from 2011. The phase-out for single taxpayers remains the same (from $60,000–$75,000).
  • The estate tax exclusion amount increased from $5,000,000 in 2011 to $5,120,000 in 2012, while the annual gift tax exclusion remains at $13,000.
  • The Social Security Administration announced that the Social Security wage base increased from $106,800 to $110,000.
  • The limit on the value of the qualified transportation benefits exclusion for qualified parking provided by an employer to its employees rose by $10 to $240 per month.

John Wojcik

John Wojcik is a Tax Manager and works with a variety of firm clients, including individuals, family businesses, business owners, and various corporations. John earned his bachelor's degree in accounting from Illinois State University and his MST in taxation from Northern Illinois University - College of Business.