Annual gift exemption amount to increase in 2006
According to CCH Tax and Accounting, the annual gift tax exemption will increase to $12,000 in 2006, from $11,000 currently. The exclusion amount increases based on inflation, but only in increments of $1,000.
Other education-related tax provisions will also see inflation adjustments in 2006:
-- The standard deduction will increase from $800 to $850 and the kiddie tax will trigger at $1,700, up from $1,600
-- The phase-out range for the education savings bond interest exclusion will begin at $63,100 ($94,700 for married filing joint)
-- The phase-out range for Hope and Lifetime Learning credits will begin at $45,000 ($90,000 married filing joint), and the $1,000 credit amounts themselves are raised to $1,100
-- No change to the phase-outs on deduction for student loan interest
Return to 529 News centerOther education-related tax provisions will also see inflation adjustments in 2006:
-- The standard deduction will increase from $800 to $850 and the kiddie tax will trigger at $1,700, up from $1,600
-- The phase-out range for the education savings bond interest exclusion will begin at $63,100 ($94,700 for married filing joint)
-- The phase-out range for Hope and Lifetime Learning credits will begin at $45,000 ($90,000 married filing joint), and the $1,000 credit amounts themselves are raised to $1,100
-- No change to the phase-outs on deduction for student loan interest