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ARTICLE · 20 JUNE 2006

2006 Tax Legislation

Dorsey & Whitney LLP
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In early May, Congress passed the Tax Increase Prevention and Reconciliation Act (TIPRA). President Bush signed it into law on May 17, 2006. The new legislation includes both favorable and unfavorable provisions. Here we briefly explain the most important changes.

United StatesTax
Dean Barr
Dean Barr

In early May, Congress passed the Tax Increase Prevention and Reconciliation Act (TIPRA). President Bush signed it into law on May 17, 2006. The new legislation includes both favorable and unfavorable provisions. Here we briefly explain the most important changes.

Preferential Tax Rates on Capital Gains and Dividends Extended through 2010

For individual taxpayers, TIPRA extends through 2010 the preferential federal income tax rate structure for long-term capital gains and qualified dividends. The maximum rate on most long-term gains and dividends will remain at the current 15%.

One-year Alternative Minimum Tax Fix

TIPRA includes two quick fixes, for this year only, to the individual alternative minimum tax (AMT) rules. These changes will prevent millions more (possibly including you) from owing the dreaded AMT this year. Under the first fix, the 2006 AMT exemption amounts are increased as follows:

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