Posted on November 03, 2006 at 09:54:20:
The Alternative Minimum Tax (AMT) was originally designed to catch the super-rich who’d managed to put all their income into tax-free or tax-advantaged instruments; since then it has trapped millions of middle-income taxpayers with its complex provisions. In the new tax law, the AMT exemption has been raised, for 2006 only, to $62,550 for those filing jointly and $42,500 for singles. This will enable some 15 million taxpayers to escape the AMT net.
Another bonus: The top rate on capital gains and dividends will remain at 15 percent through 2010; it was supposed to rise to 20 percent in 2008. Also, low-income filers continue at 5 percent for dividends and long-term gains.
Another provision helps senior citizens who pay or have paid an entry fee to a continuing care facility that can be returned when they move or die. They no longer – at least through 2010 – have to recognize phantom interest income under below-market loan rules.