 | Social Security
-- The taxable wage base for Social Security increases to $94,200. This
equates to a total social security withholding of $5,840.40. The earnings
limit for under age 65 has increased to $12,480. |
| Traditional and ROTH IRA
-- The contribution limit remains at $4,000 if under age 50, but increases to
$5,000 if age 50 or above. |
| Pension Plans
-- The SIMPLE limit remains unchanged at $10,000 with a maximum catch-up contribution
increasing to $2,500. The 401(k) and 403(b) deferral limit
increases to $15,000 with a maximum catch-up contribution of $5,000. The
new Roth 401(k) limit is $15,000 with a maximum catch-up contribution of
$5,000. |
| Mileage
-- The standard mileage rate for business use of an automobile increases to
44.5 cents a mile. The standard mileage rate for use of an auto for
services to a
charitable
organization remains the same as the beginning of 2005 at 14 cents a mile;
however charitable miles related to Katrina are deductible at 32 cents a mile
(reimbursed mileage is 44.5 cents per mile). The rate for
use of an auto
for medical reasons and
for computing deductible moving expenses
increases to 18 cents. |
| Annual Gift Exclusion
-- The exclusion amount increases to $12,000. |
| Standard Deduction
-- The basic standard deduction increases to $5,150 for single and married
filing separately taxpayers and $10,300 for married couples. |
| Personal Exemption
-- The deduction increases to $3,300 subject to phase-out limitations. |
| Adoption Credit
-- The maximum credit increases to $10,960 subject to phase-out limitations. |
| Hope Credits
-- The maximum Hope credit increases to $1,650 per student if used for
qualified tuition and related expenses, subject to phase-out limitations. |
