2006 IRS Tax Changes - Tax Years 2006 and Later

Article added: 02/01/2006 from the IRS Website

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Summary of 2006 Tax Law changes from the IRS website.  Links point to additional up to date 2006 Tax Information.
 

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Depreciation and Section 179 Expense Changes for Tax Year 2006

Increased section 179 limits. The maximum section 179 deduction you can elect for property you placed in service in 2006 is increased to $108,000 for quali­fied section 179 property. This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $430,000.

More information. Publication 946, How to Depreciate Property , has more information on these rules. Click here for Section 179 Tax Changes for 2006

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Self-Employment Tax Changes for Tax Year 2006

The self-employment tax rate on net earnings remains the same for 2006. This rate, 15.3%, is a total of 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).

The maximum amount subject to the social security part for tax years beginning in 2006 has increased to $94,200. All net earnings of at least $400 are subject to the Medicare part.

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Social Security and Medicare Tax Changes for Tax Year 2006

 
For 2006, the employer and employee will continue to pay:

6.2% each for social security tax (old-age, survivors, and disability insurance), and

1.45% each for Medicare tax (hospital insurance).
Wage limits. For social security tax, the maximum amount of 2006 wages subject to the tax has increased to $94,200.

For Medicare tax, all covered 2006 wages are subject to the tax. Circular E (Publication 15), Employer's Tax Guide, has more information about these taxes. CLICK this Link for Publication 15 - Changes to the Employer's Tax Guide for 2006

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Standard Mileage Rate Changes for 2006 Tax Year

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