5 New Tax Law Changes Affect You
West Essex Tribune
October 13, 2005
There have been several recent tax law changes you ought to know about. Among them are:
- The limitation on most charitable donations of 50% of Adjusted Gross Income has been changed to a limit of 100% of Adjusted Gross Income for donations made from August 28, 2005 to December 31, 2005.
- The itemized deduction phase-out for most charitable donations made from August 28, 2005 to December 31, 2005 has been eliminated.
- These changes mean it may be the ideal time for you to consider a charitable remainder trust that pays you an annuity for your lifetime and gives you a current charitable donation income tax deduction.
- The standard mileage rate for business use of your car has been raised from 40.5 to 48.5 cents per mile effective September 1, 2005.
- The annual gift tax exclusion is increased beginning January 1, 2006 to $12,000. That means you can give $12,000 each to as many people as you want with no federal gift tax consequences.
- The federal estate tax exemption will increase to $2,000,000 effective January 1, 2006. However, the New Jersey estate tax exemption remains only $675,000, so if your total assets, including your home, retirement plans and life insurance are more than $675,000 you need to plan avoid unnecessary taxes.