US 2006 Tax Law Changes

2006 Tax Laws

In 2006 there were many changes made in tax laws, ranging from tax breaks for investments in energy to tax laws that, having expired in 2005, are being renewed. These new tax laws made for greater deduction rates for mileage when using your vehicle for business, and for all tax-payers there is a new set of tax brackets to compensate for inflation, as well as a larger standard deduction for everyone. In response to Katrina, there have also been many changes made to tax laws related to hurricane victims and those that are helping in the relief effort. These allow for many tax breaks for victims, and deductions that can be made to those who are helping out in the aftermath. These new tax laws affect everyone, and there’s no way to avoid it.

2006 Tax Law Changes

Although tax rates have changed, the bracket has been expanded, allowing for more of your income to be taxed at a lower rate. The standard deduction was also increased for 2006, yet this is a change that occurs annually to account for inflation. There has also been a significant increase in the amount that can be deducted from mileage used as a business expense, which was an increase from 40.5 cents per mile to 44.5 cents per mile. To keep up with this, the amount to be deducted from mileage accumulated to get medical care or to move was increased from 15 cents per mile to 18 cents per mile. And on the subject of Hurricane Katrina relief, anyone helping to provide relief for the victims will receive higher rates of deductions, including a 32 cent per mile deduction for all transportation made to assist in hurricane relief.

2006 New Tax Laws

These changes to the tax system since 2006 have affected all tax-payers, so it is important to understand the changes that will affect a wide range of people. The amount deductible from each exemption has increased by $100 since 2005, the new value being $3,200 in 2006. The taxable income for Social Security has been raised as well, an increase from $90,000 to $94,200. The process by which you can apply for an extension has been simplified as well, should you have too many problems filing your return under the slew of changes to tax law. Most of these changes are there to help you save money as a tax-payer, though, so it is worth having to deal with the yearly changes.