Updated Tax Figures for 2009

The IRS provided updated dollar amounts for a wide variety of tax figures that are adjusted annually for inflation. Of particular note, there are higher dollar amounts for the standard deduction, personal exemption, and maximum contribution limits for retirement plans.

One of the figure that is changing for next year is the annual gift tax exclusion amount, which will be $13,000 starting January 1, 2009. The annual gift exclusion amount was $12,000 for the years 2006 through 2008. Taxpayers who use giving as part of an estate planning strategy will welcome the opportunity to give away more money without incurring any gift tax consequences.

Another closely watched figure is the maximum contribution amount for a 401(k) retirement plan. For 2009, this amount will be $16,500, or $22,000 if the participant is age 50 or older. The same contribution limit applies to 403(b) and 457 plans. Several of my clients try to max out their retirement savings every year, and one way to ensure you don't contribute too much is to save the exact amount you need per pay period. For a monthly paycheck, this works out to be $1,375 per month.

More details:

• 2009 Tax Figures
• 2009 Inflation Adjustments Widen Tax Brackets and Expand Tax Benefits (IRS.gov)
• IRS Announces Pension Plan Limitations for 2009 (IRS.gov)