The Labor Department reported CPI fell 1.3% over the past 12 months. So much for worrying about inflation!

As a result the IRS announced in Revenue Procedure 2009-50 that tax rate brackets and various tax benefits will remain unchanged or change only slightly for tax year 2010.

Highlights include the following:

  • The value of each personal and dependency exemption available to most taxpayers is $3,650 – unchanged from 2009.
  • The new standard deduction for heads of household is $8,400 – up from $8,350 in 2009. For other taxpayers the standard deduction remains unchanged at $11,400 for married couples filing a joint return and $5,700 for singles and married individuals filing separately. Nearly two out of three taxpayers take the standard deduction rather than itemizing deductions such as mortgage interest, charitable contributions and state/local taxes.
  • Various tax bracket thresholds will see minor adjustments. For example a married couple filing a joint return will find the taxable income threshold separating the 15% and 25% brackets is $68,000 – up from $67,900 in 2009.
  • The annual gift tax exclusion remains unchanged at $13,000.
  • The maximum pre-tax 401(k) contribution remains at $16,500. The age 50+ catch up contribution remains at $5,500.