The Internal Revenue Service has applied 2008 tax year inflation adjustments to dollar limitations for pension plans, long term care insurance tax breaks and other items.
The adjustments are required by Section 415 of the Internal Revenue Code, which requires the IRS to increase many minimums, maximums and other figures to reflect increases in the cost of living.
The limit of the annual benefit under a defined contribution plan, for example, will increase to $46,000, from $45,000, and the annual benefit limit for defined benefit plans will increase to $185,000, from $180,000.
Taxpayers who are eligible to deduct long term care insurance premiums will be able to record deductions ranging from $310 for taxpayers ages 40 and younger to $3,850 for taxpayers ages 70 and older.
In 2007, the deduction range for LTC premiums was $290 to $3,680.
A copy of IRS Revenue Procedure 2007-66, the notice that lists the inflation adjustments, is available