Highlights of Tax Changes for 2012 Provisions that lapsed after 2011 Many popular tax breaks were not extended in 2011 including write-offs for state sales taxes, college tuition and up to $250 of teachers' classroom supplies. The $500 credit for energy efficient home improvements has expired while solar credits were not effected. Business tax breaks also expired including 100% bonus first-year depreciation, this has been reduced to a 50% write off for assets that are placed in service this year. Social Security The wage base rises to $110,100, a $3,300 increase over 2011. The employee' Social Security tax rake was lowered to 4.2% down from 6.2%. Self employed tax payers will pay 13.3% on the first $110,100, 2.9% above that. Social Security benefits are going up 3.6% in 2012. Standard Deduction Increased by small amounts, married up to $11,900, single $5,950 and head of household $8,700. The personal exemption increased to $3,800 per person. Savings Plans The maximum 401(k) contribution is $17,000 this year, this is up $500 from last year. Individuals born before 1963 can put in as much as $22,500. |