Happy New Year Tax Changes

Have a happy and healthy New Year! Here are some tax changes effective today (January 1) that may help you out this year:

• Reduction in income taxes through annual inflation adjustments to tax brackets and increase in the standard deduction.
• Loss of benefit of itemized deductions and personal exemptions for higher income taxpayers - starting in 2006, affected taxpayers lose only 2/3 of the itemized deductions and exemption amounts that would otherwise disappear.
• The unified credit exclusion for estate taxes for persons dying in 2006 jumps from $1.5 million to $2 million. The top federal estate tax rate declines 1% to 46%.
• The annual gift-tax exclusion amount will increase from $11,000 to $12,000. This is the first increase since 2002.