Here is a brief summary of some of the more important federal tax changes for calendar year 2008:
- The social security taxable wage base increases from $97,500 to $102,000.
- The limit for contributions to a traditional or Roth IRA increases from $4,000 to $5,000.
- The contribution limit for 401(k) plans remains $15,500, with an additional $5,000 per year which can be contributed by employees who are age 50 and older during 2008. (If you turn 50 in 2008 you qualify!)
- The business mileage deduction increases from 48.5 cents per mile to 50.5 cents per mile. (imagine that!)
- The threshold for the phase-out of itemized deductions increases from $156,400 to $159,950 for all filers except married, filing separately ($79,975 each).
- The personal exemption amount increases from $3,400 to $3,500.
- Unearned income of a child that is not subject to tax (the so-called “kiddie” tax) increases from $1,700 to $1,800.
– Kevin Palmer