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Changes in Tax Limits in 2006

Estate Taxes: First the basic exclusion from the Federal estate tax jumps from 1.5 million to 2 million.  (Sorry, there is no change in estate taxes exclusions at a state level).

Gift Tax: For the first time since 2002, the annual gift-tax exclusion will increase - an important point for people to consider as part of their estate planning strategy.  The exclusion will rise to $12,000, from $11,000 in 2005.  This means that you can give away as much as $12,000 to anyone you wish - and to as many people as you wish- without having to report it to the Internal Revenue Service.

Retirement Savings: The maximum amount that workers can contribute to a 401(k) plan will increase in 2006.  For someone who is under the age of 50, the top amount will be $15,000, up from $14,000 in 2005.  Those 50 and older at any time next year can put away an additional $5,000 (up from $4,000 in 2005), for a total of $20,000.

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