2006 Inflation Adjustments Widen Tax Brackets,
Change Tax Benefits
WASHINGTON — Personal exemptions and standard deductions
will rise, tax brackets will widen and individuals will be able
to make larger tax-free gifts in 2006, thanks to inflation adjustments
announced today by the Internal Revenue Service.
By law, a variety of tax provisions must be revised
each year to keep pace with inflation. As a result, more than
three dozen tax benefits, affecting virtually every taxpayer,
are being modified for 2006. Key changes affecting 2006 returns,
filed by most taxpayers in early 2007, include the following:
- The value of each personal and dependency exemption, available
to most taxpayers, will be $3,300, up $100 from 2005.
- The new standard deduction will be $10,300 for married couples
filing a joint return, $5,150 for singles and $7,550 for heads
of household. Nearly two out of three taxpayers take the standard
deduction, rather than itemizing deductions, such as mortgage
interest, charitable contributions and state and local taxes.
- Tax-bracket thresholds will increase for each filing status.
For a married couple filing a joint return, for example, the
taxable-income threshold separating the 15% bracket from the
25% bracket will be $61,300, up from $59,400 in 2005.
- The annual gift tax exemption will be $12,000, up from $11,000
in 2005.
Revenue Procedure 2005-70, containing a complete rundown of
inflation adjustments, is posted on the IRS Web site and will
appear in Internal Revenue Bulletin 2005-47, dated Nov. 21,
2005.
Credit: http://www.irs.gov/newsroom/article/0,,id=150172,00.html
U.S. Internal Revenue Service - IRS.gov - The
Newswire
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