2006 Tax Law Changes

How tax requirements have changed for '06

Changes will affect just about all taxpayers.

Every year, Congress or the Internal Revenue Service makes life better or worse for taxpayers by changing the tax laws or the tax rules that implement the tax laws. 2006 was no exception. There were a whole slew of tax law changes, including some changes that didn't come until December. Changes for 2006 range from annual adjustments to account for inflation to breaks for energy investments to renewals of a number of tax breaks that had expired after 2005 but still enjoyed enormous popular support. Here are the changes that affect most taxpayers.
New tax brackets for all taxpayers.

The brackets are adjusted for inflation.

Standard deduction goes up.

Changes to the standard deduction for 2006 are higher and broader.

Personal exemption moves higher.

This will affect all members of your family.

Alternative Minimum Tax exemption rises in 2006.

This helps taxpayers who might have too many deductions.

Congress renews a big education tax break.

This will help families with students in college.

IRA deduction limits go up.

This will help taxpayers trying to build up retirement stakes.