Several tax laws changed starting January 1, 2010, one tax law did not change, and several tax breaks for businesses expired, but they may be re-instated by Congress. Here is the list:
Social Security Withholding Maximum
For the first time in many years, the maximum amount of wages considered for Social Security withholding did not change. The maximum Social Security wages in 2010 is $106,800, the same as for 2009. The Social Security Administration says the amount was kept the same by law, because the cost of living indicators did not trigger an increase in benefits for 2010.
This change does not affect Medicare, which has no maximum deduction. The withholding rate for Social Security remains at 6.2 percent, and the Medicare rate continues at 1.45 percent, for a total deduction for each employee of 7.65 percent.
IRS Standard Mileage Rates
The IRS lowered the standard mileage rates for 2010 for business and medical/moving driving (but not for driving for charities) to:
- 50 cents per mile for business miles
- 16.5 cents per mile for medical or moving purposes
- 14 cents per mile in service of charitable organizations.
Business Depreciation Changes
Unless Congress restates these depreciation amounts, several key depreciation are reduced or not available for business assets purchased after December 31, 2009:
- The higher amounts for Section 179 depreciation of $250,000 are gone, back to $134,000 on assets purchased and put into service in 2010.
- The 50% bonus on first year depreciation is gone
- Increased depreciation on heavy hybrids is also gone
As I noted above, though, there is a chance that Congress may give back these increased write-offs, to stimulate business spending. I will let you know if I hear anything.
For More Information
Save on Taxes with Business Depreciation
More About FICA Taxes (Social Security and Medicare)
Business Mileage Questions and Answers